Humber/Ontario Real Estate Course 3 Exam Practice

Is Seller Buchanan responsible for paying the agreed remuneration if the transaction fails due to their refusal to close the deal?

1. No, payment is only due upon successful completion of the sale

2. No, because notice of cancellation was given within a grace period

3. Yes, because the Confirmation of Co-operation and Representation was signed

4. Yes, as the listing agreement specifies payment if the seller defaults

5. No, as long as the seller communicates their intention not to sell

6. Yes, if an arbitration concludes that the seller was at fault

The correct answer is: Yes, as the listing agreement specifies payment if the seller defaults

The correct answer is that Seller Buchanan is responsible for paying the agreed remuneration because the listing agreement specifies payment if the seller defaults. In real estate transactions, the listing agreement is a legally binding contract that outlines the terms of the relationship between the seller and the real estate agent. If the seller refuses to close the deal after agreeing to the sale, this is considered a default on their part. The terms of the agreement typically stipulate that the agent is entitled to receive their commission regardless of the outcome, as long as the agent has fulfilled their obligations in procuring a buyer. This concept is established to protect real estate professionals from losses resulting from a seller's decision to back out of a transaction after engaging in the process. Therefore, the listing agreement's specification of remuneration despite seller default is crucial for enforcing the agent's right to payment in such cases. Understanding the binding nature of these agreements is essential for both parties involved in the transaction. In contrast, other options suggest varying conditions largely focused on cancellation rights, grace periods, communication, or external determinations, which do not align with the legal stipulations set forth in the agreement regarding commission earned upon default.