ALL ONTARIO
ALL ONTARIO
ALL ONTARIO
Radka Hnilicova
Real Estate Sales Representative
What Is a Holdover Period?
What does it mean in the real estate agreement?
People are often confused about what is a Holdover Period which you can find in Listing and purchase agreement.
Once I met a very nice lady who wanted to sell her house. She had the house listed with some agency but the listing has expired. She said that she was told that she cannot sell her house for 3 months after her agreement has expired. Because that’s what the contract said.
NOT COMPLETELY TRUE!!! This statement is referring to the HOLDOVER PERIOD which is
included in both: Listing Agreement or Buyer Representation Agreement. Why is it there?
This clause is included to discourage the practice of an unscrupulous buyer or seller, who was introduced to a property by a REALTOR® during the term of the contract, usually near the expiry date, from returning after the expiry date to attempt to buy or sell the property privately, and to dishonorably exclude the brokerage and deprive it of its rightful commission.
What are your rights?
The duration is agreed upon between the REALTOR® and the client(s) but is typically 60 to 90 days. If during this period, the client, or someone on behalf of the client, agrees to or accepts an oer to purchase the subject property from a client who had been introduced to, or shown, the property by the brokerage, from any source, during the term of the listing, then the client must pay the brokerage the contractually agreed commission.
BUT! After the expiry date of the listing, if the seller enters into a new listing agreement with another brokerage, then his liability to pay commission to the first brokerage is reduced by the amount of commission he must pay to the second brokerage.
For example, if the original brokerage commission was to be 6%, and the seller signs a new contract with a
competing brokerage at 5%, and the property sells to a previously introduced buyer as described, then the seller may still be liable to pay the first brokerage a commission of 1% of the sale price plus HST.
If the commission is the same than the seller does not have to pay anything to the previous brokerage.
Same with the buyer’s agency.
I personally don’t like to be tied up with the agreements because what happens if I don’t like the service I’m getting.
That’s why I offer all my clients EASY EXIT WARRANTY. I like to work only for people who want to work with me. What is the benefit to have someone under the agreement if they are not happy with my service? It takes so much positive energy which can be used for my other clients.
When you enter into an agreement (of any kind, not just Buyer Representation or Listing Agreements), it is
important to clearly understand both parties’ rights and obligations. And if you are not sure always contact your lawyer!