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?

Q: What is the correct answer to: 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?

The correct answer is Yes, due to the holdover clause protection period. 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.

Q: What background knowledge is needed for this Contracts & Agreements question?

Holdover clauses are standard provisions in listing agreements that extend commission protection beyond the listing expiry date. These clauses typically provide 30-90 days of protection for buyers who were introduced to the property during the active listing period. The clause must clearly specify the protection period duration and conditions for commission entitlement. Under provincial real estate legislation and regulations, holdover provisions must be clearly disclosed to sellers and included in written listing agreements. This protection mechanism ensures brokerages receive fair compensation for their marketing efforts and prevents sellers from manipulating timing to avoid commission payments.

Q: What is a good way to remember the answer to this Contracts & Agreements question?

HOLD: Holdover clauses Override Listing Dates. Think of a brokerage 'holding onto' their commission rights even after the listing expires, like holding a protective umbrella that extends beyond the original coverage period to shield their earned commission from buyers they introduced. When you see questions about expired listings and commission obligations, remember HOLD - the holdover clause Override Listing Dates for buyers who were introduced during the active period. This helps you identify that expiry doesn't automatically eliminate commission rights.

Q: What exam tip applies to this Contracts & Agreements question?

Look for key details: listing expiry date, offer submission date, and whether the buyer was shown during the listing period. If the buyer was introduced during the active listing and submits an offer after expiry, holdover clause protection typically applies.

Q: How does this Contracts & Agreements concept apply in real world practice?

A listing expires June 30th after extensive marketing. On July 10th, a buyer who attended an open house in May submits an offer that's accepted. The seller argues no commission is owed since the listing expired. However, the holdover clause in the listing agreement provides 60-day protection for introduced buyers. The brokerage successfully claims their full commission because they introduced this buyer during the active listing period, demonstrating how holdover clauses protect legitimate commission rights in practice.

Question

Contracts & AgreementsListing AgreementsONMEDIUM

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?

Answer Options

A

No, because the listing agreement had expired

B

Yes, due to the holdover clause protection period

C

Only if the seller agrees in writing

D

Yes, but at a reduced commission rate