California Real Estate Practice Exam

What must be included in a listing agreement to make a commission claim enforceable?

1. A confidentiality clause

2. An exclusive right to sell clause

3. A definite termination date

4. A non-disclosure agreement

The correct answer is: A definite termination date

To have a commission claim enforceable in a listing agreement, a definite termination date is essential. This is because having a clear end date establishes a specific timeframe during which the broker is entitled to earn a commission for their services. Real estate regulations often require that listing agreements, in order to be valid and enforceable, include a clearly defined start and end date. This protects both the client and the broker by ensuring that the terms of the agreement are understood and that the broker is not indefinitely tied to the property without any expectation of compensation. In contrast, while confidentiality clauses and non-disclosure agreements may serve important purposes in protecting sensitive information, they do not directly relate to the enforceability of the commission claim. Additionally, an exclusive right to sell clause, although standard and beneficial for the broker, is not the only means to ensure a commission claim; it can be included for stronger rights, but it doesn't substitute for the necessity of a definite termination date. Thus, the presence of a definite termination date is what makes the commission claim enforceable in a listing agreement.