5 Contract Clauses Every Broker Should Flag before the Client Signs

In commercial real estate deals, the provisions that cause the most trouble are often the ones that receive the least attention. Tucked into the back half of an agreement, “boilerplate” clauses can quietly dictate outcomes long after the deal has closed. Whether the deal involves a shopping center in Plano or a mixed-use project in Palm Springs, certain contract provisions create outsized risk in commercial and construction-heavy transactions.

Below are five clauses we consistently see causing problems for owners, investors, and developers (in both California and Texas) that brokers should flag before their client signs.

1. Indemnity Clauses (Including in Construction and Commercial Leases)

Indemnity language is often buried deep in the agreement, but they can dramatically shift risk.

In construction contracts, owners may unknowingly agree to indemnify contractors for broad categories of claims, including ones arising from the contractor’s own negligence (subject potentially to anti-indemnity statutes). In leases, tenants may assume defense obligations that go beyond what insurance will actually cover.

Both California and Texas limit the advice that brokers, as non-lawyers, can provide (through laws like Bus. & Prof. Code and TRELA, and licensing agencies TREC and DRE). This can make early identification of risky indemnity language critical. Make sure the client reads and understands these provisions. If you need a lawyer to jump in even just to explain, do it. Brokers who stray into drafting substantive risk-shifting provisions can create exposure for themselves.

Broker takeaway: The indemnity clause will likely warrant legal review, especially if it is longer than a paragraph, mutual in name only, or tied to “any and all claims" (even more so in construction or landlord-side representation).

2. Attorney’s Fees Provisions

Many clients assume attorney fees automatically go to the “winner.” But that isn’t always true. Some contracts say only one side may be entitled to fees. Others may say that neither side gets fees, or it’s silent as to fees, or they require mediation before fees are available. In some extreme cases, attorney fees can actually exceed the claim of damages!

California requires mutuality in contracts as to attorney fees. (Civ. Code section 1717). That is, if one party is entitled to fees, so is the other side. This can be limited by tying fees to certain conditions (e.g., demanding mediation, or agreeing to mediate after receiving a demand). But California requires explicit language in the contract or in statute awarding fees, otherwise they are not available.

In Texas, many breach of contract claims will bring along a claim of attorney fees by contract or by statute. (Tex. Civ. Prac. & Rem. Code section 38.001 et seq.). However, the contract can say neither side gets attorney fees, or that they may only be awardable to one side.

Broker takeaway: If your client is signing a heavily one-sided fee clause, the economics of any future dispute just changed, sometimes dramatically. Review carefully to ensure mutuality, clarify prevailing party standards, and avoid unintended fee exposure.

3. Liquidated Damages (Purchase Agreements)

Earnest money forfeiture clauses are often treated as “standard.” But whether a liquidated damages clause is enforceable depends on how it’s structured and whether it reasonably estimates anticipated damages. In each state, poorly drafted provisions can be challenged (or worse, enforced when your client didn’t expect it).

In California, liquidated damage rules can be strict, and enforceability may turn on whether the amount was reasonable at the time of contracting and tied to anticipated harm rather than serving as a penalty. Courts may scrutinize the negotiation process, the relative sophistication of the parties, and whether the clause was truly bargained for. In both states, the label “liquidated damages” does not control; the substance and structure of the provision do.

In Texas commercial contracts, automatic forfeiture language is very common, as is waiver of additional remedies. Parties often agree that the seller’s sole and exclusive remedy is retention of the earnest money, which can provide certainty. But it can also unintentionally cap recovery in a way your client didn’t fully expect.

Broker takeaway: If the deal has unusual risk (entitlements, phased construction, financing contingencies), the liquidated damages number shouldn’t be “plug and play.” It needs to be tailored to the agreement and the parties.

4. “As-Is” Language

“As-is” does not mean “no liability whatsoever for the property’s condition,” but clients frequently think it does. In commercial transactions, sellers rely heavily on as-is language. Buyers often underestimate how strongly it can limit post-closing remedies.

Problems arise when the buyer does not conduct due diligence (very important in these circumstances), environmental conditions may surface later, and prior construction defects were not known or disclosed.

In California, such clauses do not remove the seller’s obligation to disclose certain defects. If you’ve ever sold or bought property in California, you’ve seen some of these disclosures. And in Texas, there are several exceptions (such as fraud in the inducement, impairing inspections).

Broker takeaway: Texas and California courts analyze as-is clauses in context, particularly where there are allegations of fraud, nondisclosure, or unequal bargaining power. If your client is relying on representations outside the four corners of the agreement, make sure those representations actually made it into the contract.

5. Repair Credits vs. Repair Obligations

This is one of the most common sources of post-inspection disputes. Repair obligations define who is responsible for fixing property issues (generally, with the seller), what must be repaired, and when those repairs must be completed before closing. There is a meaningful difference between “Seller shall repair prior to closing” and “Buyer accepts property with a $X credit at closing.”  

Credits, on the other hand, generally shift risk to the buyer. In construction-adjacent deals, poorly defined repair language can morph into mini construction contracts without appropriate protections (no standards, no supervision rights, no lien protections).

Broker takeaway: If the issue involves structural components, roofing, HVAC, environmental conditions, or foundation concerns, clarity matters more than speed. Define the scope, timing, documentation, and right to verify completion.

Why This Matters for Brokers

Texas and California strictly regulate what licensees can and cannot do or say. The line between facilitating a transaction and providing legal advice can blur quickly, especially in commercial and construction deals where forms get modified.

The brokers we work with most successfully do one thing consistently: they flag risk early. This protects the agent, the principal, the transaction, the commission, and the agent’s reputation.

Final Thought

This is not about turning brokers into lawyers; it’s about knowing where deals most often break. Commercial deals, particularly those involving construction or development, are rarely “form only” transactions. If a clause reallocates risk, waives rights, shifts defense obligations, or limits remedies, it’s worth slowing down long enough to understand it, because the clause that “wasn’t supposed to matter” is often the one that ends up in litigation.

Finally, it's worth noting that these aren't the only clauses that can cause problems. Heckman Law, PC’s ongoing (and unscheduled) “Common Clauses” series addresses several others.