Humber/Ontario Real Estate Course 4 Exam Practice

What does the holdover clause in a seller representation agreement typically protect?

1. ABC Realty Inc.

2. Seller Ganim.

3. The purchaser.

4. The salesperson representing the buyer.

5. The holding company owning the property.

6. The escrow agent overseeing the transaction.

The correct answer is: ABC Realty Inc.

The holdover clause in a seller representation agreement primarily serves to protect the interests of the brokerage, such as ABC Realty Inc. This clause typically stipulates that if a seller ends the representation agreement but sells the property to a buyer who was introduced to the property during the term of the agreement within a specified timeframe afterward, the brokerage is entitled to a commission. This provision ensures that brokerages receive compensation for their efforts in marketing the property and facilitating potential buyer interest, even if the agreement is terminated before a sale occurs. This protection is crucial for brokerages as it provides a safeguard against losing out on commissions for potential deals cultivated during their representation period. Other options, such as the seller, the purchaser, or related parties like the salesperson or escrow agent, do not directly benefit from the holdover clause in the same way the brokerage does.