Humber/Ontario Real Estate Course 2 Exam Practice

Agent Adams signed a listing agreement with a brokerage. The brokerage found a buyer who made an acceptable offer to Adams. Before closing and after the listing agreement expired, Adams refused to close because they couldn't purchase another home. Which statement is correct?

1. The brokerage is entitled to remuneration due to Adams' inability to close.

2. No remuneration is due as the sale was not finalized.

3. Remuneration depends on whether the buyer defaulted, not Adams.

4. The brokerage cannot pursue remuneration as the listing agreement expired.

5. The brokerage can pursue remuneration as the listing was valid when the offer was accepted.

6. The seller must pay penalties for not closing the deal.

The correct answer is: The brokerage is entitled to remuneration due to Adams' inability to close.

In this scenario, the correct statement is A. The brokerage is entitled to remuneration due to Adams' inability to close. This is because Agent Adams signed a listing agreement with the brokerage, and the brokerage successfully found a buyer who made an acceptable offer. Despite the listing agreement expiring before closing, Adams was still obligated to complete the transaction with the buyer. Option B is incorrect because even though the sale was not finalized, the fact remains that Adams was in breach of the agreement by refusing to close, which entitles the brokerage to remuneration. Option C is incorrect as the responsibility for remuneration in this case lies with Agent Adams, who failed to fulfill their obligations by not closing the sale. Option D is incorrect because the expiry of the listing agreement does not automatically negate the obligations and responsibilities that were established during the term of the agreement. Option E is incorrect because the validity of pursuing remuneration in this case is not dependent on the listing agreement's status at the time the offer was accepted, but rather on Agent Adams' failure to fulfill their obligations as a seller. Option F is incorrect as there is no mention of the seller being required to pay penalties in this scenario. The focus is on the entitlement to remuneration for the brokerage due to Adams' failure to close the deal.