Humber/Ontario Real Estate Course 4 Exam Practice

Which statement about the holdover period in a seller representation agreement is accurate?

1. It applies indefinitely until the property is sold.

2. It does not apply if another brokerage sells the property.

3. It only applies to buyers introduced by the original brokerage.

4. It ends as soon as the seller signs a new agreement with another brokerage.

The correct answer is: It only applies to buyers introduced by the original brokerage.

The holdover period in a seller representation agreement refers to a specific timeframe during which the original brokerage is entitled to a commission for facilitating the sale after the agreement has ended. The accurate statement is that it only applies to buyers introduced by the original brokerage. This means that if a buyer was introduced to the seller by the brokerage during the representation period, the brokerage retains the right to earn a commission if that buyer purchases the property within the holdover period, even if the seller has terminated the agreement. In contrast, the indefinite nature of the holdover period, as suggested in the first choice, is misleading because the duration is defined in the agreement itself and does not extend indefinitely. The notion that the holdover does not apply if another brokerage makes the sale is also incorrect; the holdover applies specifically to buyers that were introduced by the original brokerage, regardless of any subsequent agreements with other brokerages. Lastly, the assertion that the holdover period ends as soon as a seller signs a new agreement with another brokerage overlooks the fact that any potential buyers brought in by the original brokerage during the term of the agreement may still warrant a commission if the sale occurs within the designated holdover timeframe.