Humber/Ontario Real Estate Course 4 Exam Practice

What is the correct response regarding a holdover provision in a listing agreement?

1. The holdover provision would apply to full remuneration if a buyer is introduced during the current listing and buys under a new listing.

2. The holdover provision does not apply if the property is listed with another brokerage after the listing agreement expires.

3. The holdover provision applies to the original agreement's remuneration, minus what is paid to the second brokerage, if the buyer was introduced during the first listing and bought during the second period.

4. Remuneration is halved if the buyer was introduced during the first listing period and bought the property during the second listing period.

The correct answer is: The holdover provision applies to the original agreement's remuneration, minus what is paid to the second brokerage, if the buyer was introduced during the first listing and bought during the second period.

The holdover provision in a listing agreement is designed to protect the real estate agent's right to receive remuneration for a sale that occurs after the agreement has expired if the agent had introduced the buyer during the original listing period. This concept exists because the agent's efforts in marketing the property and bringing potential buyers should result in a fair commission, even if the transaction occur after the formal listing has ended. When a buyer is introduced during the first listing period and subsequently purchases the property after a new listing agreement is established with a different brokerage, the holdover provision generally allows the original brokerage to claim remuneration based on the terms of the original agreement. The provision typically stipulates that the remuneration would be calculated based on the percentage agreed upon in the first listing agreement, minus any amount that may be owed to the second brokerage for their services in facilitating the final sale. This means that the correct answer accurately reflects how the holdover provision works, where it recognizes the introduction of a buyer during the first listing period and ensures that the original brokerage is compensated appropriately, albeit with consideration for any fees due to another brokerage involved in the transaction. Other responses do not fully capture the nuances of how the holdover provision operates in relation to different brokerage agreements. For instance, the