In a listing agreement, what does the term 'holdover clause' typically provide?
Correct Answer
D) Commission protection for the listing agent after agreement expiry
A holdover clause protects the listing agent's right to commission if the property is sold to a buyer who was introduced to the property during the listing period, even if the sale closes after the listing agreement expires. This prevents sellers from circumventing agent commissions by waiting for the listing to expire before completing a sale.
Why This Is the Correct Answer
Option D correctly identifies the holdover clause's primary function: protecting the listing agent's commission rights after the listing agreement expires. This protection specifically applies when a property is sold to a buyer who was introduced to the property during the active listing period. Provincial real estate legislation, including TRESA and similar acts, recognize the agent's right to compensation for successful introductions, regardless of when the actual sale closes. The holdover clause prevents sellers from avoiding commission payments by simply waiting for the listing to expire before completing transactions with buyers the agent originally brought to the property.
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