Humber/Ontario Real Estate Course 3 Exam Practice

Which of the following statements best describes Mr. and Mrs. Nash's responsibility under a holdover clause when a property is sold by another brokerage during the holdover period?

1. Their obligation to pay is nullified if the property is sold by another brokerage during the holdover period.

2. They are obliged to pay fees equating to the difference paid to another brokerage during the holdover period.

3. They are only under obligation if the property is introduced to the buyer during the initial listing period.

4. They are required to pay remuneration regardless of who the property is sold to during the holdover period.

5. They are obligated to pay remuneration for a period of up to 30 days after the listing expires as per legal constraints.

6. They can negotiate a reduced fee liability if the property is sold during the holdover period.

The correct answer is: They are obliged to pay fees equating to the difference paid to another brokerage during the holdover period.

The correct response highlights Mr. and Mrs. Nash's responsibility under a holdover clause, particularly in relation to a property being sold by another brokerage during the holdover period. A holdover clause is designed to protect the listing brokerage's right to receive compensation for their marketing efforts after the listing agreement has expired, as long as certain conditions are met. In this context, the obligation to pay fees equating to the difference paid to another brokerage emphasizes that even if another brokerage facilitates a sale during the holdover period, Mr. and Mrs. Nash still owe remuneration to the original brokerage. This contingent payment reflects the principle that the original brokerage has invested resources and time in securing a buyer and should be compensated for their efforts, particularly if the buyer was initially introduced to the property by them. Other options do not accurately capture the nuances of holdover clauses. For instance, stating that their obligation to pay is nullified if sold by another brokerage does not recognize the original brokerage's entitlement under the holdover clause. Similarly, suggesting they are only obligated if the property was introduced to the buyer during the initial listing period fails to account for the broader implications of the holdover period. The terms related to reduced fee liability or legal constraints are also not reflective of the