What is a Holdover Clause?

hold over clause in real estate: Century 21 President

When you are selling your home, your broker or salesperson will ask you to sign a listing agreement. The listing agreement is the contract between you and the brokerage that permits them to market and sell your home. These agreements should be in writing in order to protect the interest of all parties. It’s not uncommon that a listing agreement between a real estate agent and a seller include a “holdover period”. This clause states that the seller is liable to pay the commission to the real estate agent should the property sell within ‘x’ number of days after the listing agreement concludes, provided that the buyer was introduced to or saw the property during the listing period. An agent who puts in a lot of time and effort wants to be protected should a buyer decide to make an offer shortly after the listing agreement expires. 

RECO often receives calls from consumers about holdover clauses in agreements and what they mean. This is a legal question and you should seek legal advice if you have concerns. While there is no “standard” holdover clause, generally, a holdover clause means that if a property is bought or sold within “X” days of the contract expiry, and without the assistance of the broker or salesperson, commission may still be payable to that broker or salesperson.

Time Frame: This is a clause that kicks in on the day your Listing Agreement expires, and typically lasts for 90 or 120 days.

For Buyers: The standard Buyer Representation Agreement includes a similar clause, with the main difference being that a buyer that switches to a new Realtor during the holdover clause must pay the full commission to both Realtors. Keep in mind that the Holdover Clause is not a law! It's part of a negotiable agreement that you sign voluntarily. If you feel the Holdover Clause ties your hands, you have two options. First, you could try to negotiate it out of your agreement, though don't expect many Realtors to go along with this. Your second option is to use a flat fee listing service instead of one based on a percentage commission. In this case, because the Realtor's fees are guaranteed, they have no reason to include a holdover clause.

Finally, there is nothing wrong or illegal about waiting for your holdover clause to expire, then doing a deal with your buyer. However, with no guarantee that the buyer will follow through, and no compensation if they don't, this is not an option I would recommend.


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