Question:
A buyer is introduced during validity of the first representation agreement and completes the purchase under a subsequent representation agreement with another brokerage. Two observations:
“Under current practices, the holdover provision usually states that the amount of commission payable to the brokerage is reduced by the amount of commission payable to the subsequent brokerage”, and
“The holdover provision in the original representation agreement provided that the liability for commission would be reduced by the amount paid to the new brokerage under a subsequent representation agreement.”
If the commission agreed to with the new brokerage is the same as that agreed to with the original brokerage, (for example both stated 5%) does this mean the original brokerage gets nothing, even though they were the representative when the buyer was introduced?
Answer:
In this case the first Brokerage gets nothing. The second brokerage would get the full amount that they proposed to charge.
Only if the second one is lower, does the first Brokerage get anything.
Brian Madigan LL.B., Broker