The clause designed to ensure that a broker will receive a commission if negotiations with a ready, willing, and able buyer are completed after the listing has expired is called:

Rationale

An extension or 'tail' clause ensures that a broker will receive a commission if negotiations with a ready, willing, and able buyer are completed after the listing has expired.

This clause protects the broker's commission rights even after the formal listing period has ended, thereby incentivizing brokers and ensuring they are compensated for their efforts in securing buyers.

A (an acceleration clause) YOUR ANSWER

An acceleration clause is typically found in loan agreements, allowing a lender to demand the full balance of a loan if certain conditions are met, such as a default. It does not pertain to real estate commissions or the duration of a listing agreement, making it irrelevant in this context.

B (an alienation clause) YOUR ANSWER

An alienation clause, also known as a due-on-sale clause, permits the lender to call the loan due upon the sale of the property. This clause relates to the transfer of property ownership, not to the commission rights of brokers after a listing has expired.

C (a coinsurance clause) YOUR ANSWER

A coinsurance clause is commonly found in insurance policies, particularly property insurance, and it requires the policyholder to insure the property for a specified percentage of its value. This clause has no connection to real estate broker commissions or listing agreements.

D (an extension or 'tail' clause) CORRECT

The extension or 'tail' clause specifically allows brokers to earn a commission if a buyer they introduced completes a transaction after the expiration of the listing agreement. This is the relevant clause in ensuring brokers are compensated for their work, even post-expiration.

Conclusion

Understanding the various clauses in real estate agreements is essential for both brokers and sellers. The extension or 'tail' clause serves a critical function by ensuring that brokers are rewarded for their efforts in bringing buyers, even if the listing period has passed. Other clauses mentioned do not address the broker's commission rights and serve different purposes within contractual and insurance frameworks.

The clause designed to ensure that a broker will receive a commission if negotiations with a ready, willing, and able buyer are completed after the listing has expired is called:

An extension or 'tail' clause ensures that a broker will receive a commission if negotiations with a ready, willing, and able buyer are completed after the listing has expired.

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