Humber/Ontario Real Estate Course 3 Exam Practice

If a Buyer Consults Two Brokerages and Purchases from the Second One, What Obligations Persist from the First Brokerage?

1. Responsibility to pay the initial broker is capped at a period established under provincial law.

2. Duties to the initial broker are nullified upon signing with the second broker.

3. Any payments made to the initial broker are refunded by the second broker.

4. All obligations to the initial broker cease with the new agreement.

The correct answer is: Responsibility to pay the initial broker is capped at a period established under provincial law.

The choice indicating that responsibility to pay the initial broker is capped at a period established under provincial law is correct because it acknowledges the legal framework governing agency relationships in real estate transactions. In many jurisdictions, there are statutes outlining the duration of obligations to a broker after the initial engagement. This means that even if a buyer ultimately purchases through a different brokerage, the original broker may still have a right to compensation for services rendered within that specified time frame. This framework helps ensure that brokers are protected for their efforts in securing a buyer's interest, even when the buyer's final transaction occurs with another brokerage. Such laws are in place to maintain fairness and prevent agents from being unfairly disadvantaged when they invest time and resources in clients who later choose a different path. The other options do not accurately reflect the nature of obligations in real estate transactions. Duties and payments are not automatically nullified, nor is there an automatic refund mechanism involving the second broker. Additionally, obligations do not simply cease with a new agreement; a buyer must be aware of any ongoing responsibilities derived from prior agreements.