Legal Library

Realtor® Legal Tip – Protection Period vs. Cancellation of Listing form

July 16, 2018

Author: Curtis Bullock

Suppose you represent a seller as the listing agent and after some time you and the seller agree to mutually cancel the listing agreement using the Cancellation & Termination of ERTS form. In that form you check the box that says the Protection Period is not cancelled and remains in force. This means that if a buyer who was shown the home while the listing agreement was in place decides to purchase the home during the protection period, the seller agrees to pay a brokerage fee to the listing broker.

Ok now let’s add one more wrinkle. Suppose that a few days after the listing agreement was cancelled, the seller decides to re-list the home with a different brokerage and a new ERTS agreement is signed with that new brokerage. How does this impact the protection period that was preserved on the first listing agreement?

Answer: The protection period on the first listing agreement is no longer in force. This is because of the language in the last sentence of section 3 of the ERTS Listing Agreement where it states that the brokerage fee is no longer owed if the seller is obligated to a different brokerage based on “another valid listing agreement.” So in this case, the protection period lasted only for the few days between the cancellation and the signing of the new listing contract with the different brokerage.

So be sure to review these forms and know exactly how they work as you work with your clients. If you have questions or a specific situation related to this consult your broker or legal counsel.