Humber/Ontario Real Estate Course 3 Exam Practice

What is the result of a brokerage and seller agreeing to cancel a listing?

1. The listing can be reassigned to another broker immediately

2. The holdover clause no longer applies

3. The property must be re-evaluated

4. New terms must be negotiated

5. The seller is charged a cancellation fee

6. The listing is automatically reactivated

The correct answer is: The holdover clause no longer applies

The correct answer is that the holdover clause no longer applies when a brokerage and a seller agree to cancel a listing. The holdover clause typically refers to the time period after a listing agreement ends, during which a seller may still owe a commission to the brokerage if a buyer, who was introduced to the property during the listing period, completes a sale. When a listing is officially canceled by mutual agreement, it nullifies the listing terms, including the holdover clause. This means that the seller is no longer bound by the conditions of the holdover clause, and they are free to decide how to proceed with the property without the obligation to the previous brokerage regarding any potential buyers. In contrast, other options either do not necessarily take place upon cancellation or may require additional actions or agreements that are not automatically part of the cancellation process. A reassignment of the listing to another broker requires a new agreement, a re-evaluation of the property is not mandated, negotiations for new terms may or may not be needed depending on the circumstances, cancellation fees are contingent on the original agreement, and a listing will not be automatically reactivated as it requires an explicit agreement to start a new listing.