Sarah lists her home with ABC Realty under an exclusive listing agreement that expires on June 30th. On July 15th, she sells the property to a buyer who first viewed the home during an open house hosted by ABC Realty in May. Assuming a standard holdover clause exists, what is the likely outcome?

Q: What is the correct answer to: Sarah lists her home with ABC Realty under an exclusive listing agreement that expires on June 30th. On July 15th, she sells the property to a buyer who first viewed the home during an open house hosted by ABC Realty in May. Assuming a standard holdover clause exists, what is the likely outcome?

The correct answer is ABC Realty is entitled to full commission due to the holdover clause. Option B is correct because the holdover clause specifically protects ABC Realty's commission rights when a buyer they introduced during the active listing period purchases the property after expiry. Since the buyer first viewed the home at ABC Realty's open house in May (during the active listing), and purchased in July (within the typical holdover period), ABC Realty demonstrated the necessary causal connection between their marketing efforts and the eventual sale. Standard holdover clauses in Canadian listing agreements typically provide 30-90 days of protection post-expiry for such scenarios.

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

Holdover clauses (protection periods) are standard provisions in exclusive listing agreements that extend commission rights beyond the listing expiry date. They typically last 30-90 days and apply when buyers who had meaningful contact with the property during the active listing period purchase within the holdover timeframe. The clause must clearly identify qualifying buyers and specify the protection period duration. This protects brokerages from sellers who might delay closings to avoid commission. Under provincial real estate legislation like TRESA (Ontario) and RESA (Alberta), these clauses must be clearly disclosed and agreed upon in writing.

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

H - Holdover protects the brokerage, O - Original contact during active period, L - Listing expired but protection continues, D - Deal closes within protection timeframe. Think of it like 'holding onto' commission rights even after the listing 'lets go' (expires). When you see questions about sales after listing expiry, apply HOLD: check if there was Original contact during the active period, and if the Deal closed within the holdover timeframe. If both conditions are met, the brokerage HOLDs onto their commission rights.

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

Look for two key elements in holdover questions: (1) buyer contact during active listing period, and (2) sale within typical holdover timeframe (usually 30-90 days post-expiry). If both exist, the brokerage keeps full commission rights.

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

A listing expires on March 31st, and the seller decides not to renew. In May, a buyer who attended the brokerage's February open house contacts the seller directly and purchases the property. The listing agreement included a 60-day holdover clause. Despite the direct sale, the original listing brokerage is entitled to full commission because they introduced the buyer during the active period, and the sale occurred within the protection timeframe. This protects brokerages from sellers who try to avoid commission by encouraging buyers to wait until after expiry.

Question

Contracts & AgreementsListing_agreementsMEDIUM

Sarah lists her home with ABC Realty under an exclusive listing agreement that expires on June 30th. On July 15th, she sells the property to a buyer who first viewed the home during an open house hosted by ABC Realty in May. Assuming a standard holdover clause exists, what is the likely outcome?

Answer Options

A

ABC Realty has no claim to commission since the listing expired

B

ABC Realty is entitled to full commission due to the holdover clause

C

Sarah owes half commission to ABC Realty

D

The buyer must pay ABC Realty's commission