A listing agreement expires on June 15th. On June 20th, a buyer who was shown the property during the listing period submits an offer that is accepted. Under typical listing agreement terms, is the seller obligated to pay commission?
Correct Answer
B) Yes, due to the holdover clause protection period
Most listing agreements contain a holdover clause that protects the listing brokerage's right to commission for a specified period after expiry if the property is sold to someone who was introduced to the property during the listing period. This prevents sellers from avoiding commission by waiting for the listing to expire.
Why This Is the Correct Answer
Option B is correct because standard listing agreements contain holdover clauses that protect the listing brokerage's commission rights for a specified period after expiry. Since the buyer was shown the property during the active listing period and submitted an offer within the holdover period, the seller remains obligated to pay commission. This clause prevents sellers from avoiding commission by timing acceptance after listing expiry, ensuring brokerages receive compensation for their marketing efforts and buyer introductions made during the listing term.
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Previous Question
A seller's listing agreement with the first brokerage (5% commission) has a 90-day holdover clause: if the property sells within 90 days after expiry to anyone shown it during the listing period, commission is payable, but the seller's liability is reduced by any commission paid under a new written agreement with another brokerage. After expiry, the seller signs with a second brokerage at 4% and sells for $800,000 to a buyer who toured an open house during the first listing. How much does the seller owe the first brokerage?
Next Question
An Alberta seller's exclusive listing expires at 11:59 PM on December 31. An offer is presented at 11:45 PM that night, and the seller accepts it at 12:30 AM on January 1. Under the RECA Rules, what determines whether the brokerage is owed remuneration?