Humber/Ontario Real Estate Course 3 Exam Practice

What happens when Brokerage A lists a property with a 90-day holdover clause, and it sells through Brokerage B to a buyer introduced by Brokerage A 35 days after Brokerage A's contract expired?

1. Brokerage B would receive the remuneration due under its listing agreement.

2. Brokerage A would split the remuneration with Brokerage B since the buyer was introduced by Brokerage A.

3. Brokerage A's 90-day holdover provision allows it to receive full remuneration.

4. Brokerage A would get a referral fee not exceeding 20% of the total remuneration.

5. Brokerage B shares the remuneration with Brokerage A as per standard agreements.

6. Brokerage A would negotiate the referral amount post-transaction.

The correct answer is: Brokerage B would receive the remuneration due under its listing agreement.

When Brokerage A lists a property with a 90-day holdover clause, this means that if the property sells to a buyer who was introduced by Brokerage A within 90 days after the listing agreement expires, Brokerage A is entitled to a remuneration. However, since the sale in this scenario occurred 35 days after Brokerage A's contract expired, the holdover clause still applies, and the time limit does not support Brokerage A's claims to remuneration after the contract expiration. In this case, Brokerage B, which facilitated the sale, would receive the remuneration due under its listing agreement with the seller. Brokerage A would not be owed any compensation because it cannot claim remuneration after the contract has expired and the buyer pursued the transaction through a different brokerage. The key point here lies in the relationship established between the buyer and Brokerage B, which supersedes any previous relationship Brokerage A might have had with the buyer. Thus, the transaction is valid directly through Brokerage B's efforts and agreements, allowing them to receive their due compensation without any obligation to share it with Brokerage A.