Humber/Ontario Real Estate Course 2 Exam Practice

How should a seller respond when asking about the holdover provision in a listing agreement?

1. You must pay full commission if we introduced the buyer and they bought under a new listing.

2. The holdover provision does not apply if listed with another brokerage after expiration.

3. Holdover applies to original agreement's commission less what the second brokerage earns, if the buyer was introduced during the first listing.

4. You would be responsible for only half the commission if the buyer was introduced during the first listing and bought during the second.

5. The holdover includes all potential buyers listed during the agreement term.

6. No obligation if the property is subsequently listed by another brokerage.

The correct answer is: Holdover applies to original agreement's commission less what the second brokerage earns, if the buyer was introduced during the first listing.

In a holdover provision within a listing agreement, it typically states that if the property is sold to a buyer who was introduced during the original listing period by the first brokerage, the seller would owe the original brokerage a commission. However, if the property is subsequently listed with another brokerage after the original listing expires, the holdover provision may allow for a reduction in the commission owed to the original brokerage based on what the second brokerage earns. Option A is not the correct choice because it states that the seller must pay the full commission, which is not necessarily the case if the buyer was introduced during the first listing and bought under a new listing. Option B is incorrect because it suggests that the holdover provision does not apply if the property is listed with another brokerage after the original listing expires, which is not entirely accurate as the holdover provision can still be applicable under certain conditions. Option D is incorrect as it states that the seller would be responsible for only half the commission if the buyer was introduced during the first listing and bought during the second, which may not align with the terms of the holdover provision. Option E is not the correct choice because it broadens the scope of the holdover provision to include all potential buyers listed during the agreement term, which may not be the case in a standard holdover provision. Option F is incorrect as it suggests there would be no obligation if the property is subsequently listed by another brokerage, which is not the typical outcome under a holdover provision in a listing agreement. Therefore, the most accurate response is option C, which correctly reflects that the holdover provision usually applies to the original agreement's commission but may be reduced based on what the second brokerage earns if the buyer was introduced during the first listing.