Ontario Real Estate Licensing Exam Practice · Question
What is the primary purpose of a 'holdover clause' in an exclusive listing agreement?
A holdover clause, also known as a 'protective period' or 'safety clause', protects the brokerage's right to commission if the property is sold to a buyer intro
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Question: What is the primary purpose of a 'holdover clause' in an exclusive listing agreement?
Answer options:
- To allow the seller to terminate the agreement at any time without penalty.
- To prevent the property from being sold to a buyer sourced by another brokerage. ✅ To protect the brokerage's commission if the property is sold to a pre-identified buyer after the agreement expires.
- To ensure the property remains listed on MLS for a period after the agreement ends.
Correct answer: To protect the brokerage's commission if the property is sold to a pre-identified buyer after the agreement expires.
Explanation: A holdover clause, also known as a 'protective period' or 'safety clause', protects the brokerage's right to commission if the property is sold to a buyer introduced by the brokerage during the listing term, within a specified period after the agreement's expiry.
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