Humber/Ontario Real Estate Course 4 Exam Practice

In which situation does the holdover clause in a listing agreement typically become void?

1. When the property is sold by another agent

2. If the sale closes beyond the holdover period

3. When the seller represents themselves

4. If another brokerage significantly reduces the commission

The correct answer is: If the sale closes beyond the holdover period

The holdover clause in a listing agreement typically becomes void if the sale closes beyond the holdover period. This clause is designed to protect the listing brokerage in case a buyer who was introduced during the listing period completes the purchase after the listing agreement has expired. Once the holdover period ends and the sale closes, the brokerage would no longer be entitled to the commission, making this the correct choice. In the other options: A. When the property is sold by another agent: This may not necessarily void the holdover clause, as the holdover period could still apply if the sale was as a result of the efforts made during the listing period. C. When the seller represents themselves: The holdover clause would likely still be in effect even if the seller represents themselves, as it pertains to the timing of the sale. D. If another brokerage significantly reduces the commission: This action by another brokerage would not impact the validity of the holdover clause unless it specifically affects the terms outlined in the original listing agreement.