Holdover Clauses - When No-Deal Still Means Paying Commission

When a real estate broker and client enter a formal relationship, the parties typically seal the arrangement by signing a written contract. Whether it's a Listing Agreement for sellers or a Buyer Representation Agreement for buyers, the client is looking to land a deal. But sometimes that doesn't happen during the time period covered by the contract. Yet even after the agreement expires, a client could still be on the hook for paying a brokerage commission. How? Through something called a holdover clause.

What Is A Holdover Clause?

This clause appears in most representation agreements and is there to protect the brokerage. It typically states that the client must pay the previously agreed-upon commission in a very specific circumstance and within a set time period after the broker and client part ways. The holdover period is the span of time after the expiration of the agreement and during which the commission may be payable.