Humber/Ontario Real Estate Course 4 Exam Practice

After Buyer Randall's representation agreement with ABC Realty Inc. expires, does he owe remuneration for a FSBO property seen during the holdover period?

1. Owes remuneration because sale closed after the holdover period

2. Does not owe remuneration because he saw the property post-expiry

3. Owes remuneration as he saw the property during the holdover period

4. Owes remuneration for informing ABC Realty Inc. of new properties

5. Does not owe remuneration as the agreement expired

6. Does not owe because the holdover clause is void

The correct answer is: Does not owe remuneration because he saw the property post-expiry

The reasoning behind the correct response highlights the nature of representation agreements and the implications of seeing a property during a specific period. In the context of a representation agreement, remuneration is typically owed if a buyer purchases a property that was introduced to them while the agreement was still in effect. Since Randall viewed the FSBO property after the expiration of his representation agreement with ABC Realty Inc., he does not owe remuneration to the brokerage. This is because the obligation for remuneration generally ceases once the agreement ends, and the buyer can freely engage in transactions without the broker’s involvement for properties he discovers post-expiration. In contractual agreements like this, the holdover period is a critical element. It usually serves to protect the interests of the broker for a limited time after an agreement expires, but if Randall only saw the property after the agreement’s end, he cannot be held liable for remuneration related to that property. This emphasizes the importance of timing and the status of agreements in determining any financial obligations that might arise from property transactions.