Humber/Ontario Real Estate Course 3 Exam Practice

Which statement is true when using the cancellation of listing form?

1. The listing agreement can expire before the listed closing date

2. The listing agreement terms can be transferred to another broker

3. Future modifications will be prohibited

4. New listing agreements require an additional fee

5. The holdover clause is void

6. The holdover clause remains valid

The correct answer is: The holdover clause is void

When considering the cancellation of the listing form, it's important to understand how terms within the listing agreement are treated. The holdover clause is a provision that protects the broker's right to a commission if a buyer, initially introduced to the property during the listing period, purchases the property after the listing agreement has expired. Option E states that the holdover clause is void, which is incorrect. The holdover clause remains valid even if the listing agreement is canceled, meaning that the broker retains the right to claim a commission if a sale occurs within the designated holdover period after the cancellation of the listing. This clause is designed to ensure that brokers are compensated for their efforts in bringing a buyer to the property, irrespective of whether the listing agreement is still in effect. In the context of the other options, it is crucial to recognize that the holdover clause's validity is essential for protecting the interests of the brokerage, which is commonplace in real estate transactions. Thus, the understanding of the holdover clause and its implications is vital for all parties involved in a real estate agreement.