Humber/Ontario Real Estate Course 4 Exam Practice

What should happen if Buyer Raymond signs a new agreement with Brokerage B after the holdover period from Brokerage A expires?

1. Brokerage B is entitled to the remuneration, but must pay a referral fee to Brokerage A.

2. Buyer Raymond must pay Brokerage B based on 4.0% and any additional amount to Brokerage A under the original agreement at 4.5%.

3. Buyer Raymond must pay the remuneration owing to Brokerage B, with no further obligation to Brokerage A.

4. Brokerage B is not entitled to remuneration as the holdover provision from Brokerage A is still in effect and a 4.5% rate is owed under that agreement.

The correct answer is: Buyer Raymond must pay Brokerage B based on 4.0% and any additional amount to Brokerage A under the original agreement at 4.5%.

The correct understanding revolves around the ramifications of the holdover period, which generally serves to protect the interests of the brokerage that first introduced the buyer to a property. If Buyer Raymond signs a new agreement with Brokerage B after the holdover period from Brokerage A has expired, Buyer Raymond is then free to engage with Brokerage B without any further obligations to Brokerage A regarding the new agreement. The nature of agreements between buyers and brokerages typically stipulates that once the holdover period ends, the buyer can enter into a contract with a new brokerage. However, if Buyer Raymond ultimately decides to work with Brokerage B and has a contractual obligation to pay that brokerage a specific commission rate (4.0%), there is no ongoing responsibility to Brokerage A for any amounts stipulated in their prior agreement unless the holdover period is still being enforced. Once it has expired, the relationships and obligations shift accordingly. This context clarifies that Buyer Raymond, upon signing with Brokerage B after the holdover period, would continue to engage with Brokerage B based solely on their new terms without carrying any remaining obligations towards Brokerage A, rendering the other options non-applicable in this scenario.