Iowa Real Estate Practice Exam

What must a broker do to enforce a protective clause in a listing agreement?

1. Obtain written permission from the seller

2. Define the protection period in the original listing agreement

3. Notify all buyers of the protective clause

4. Cancel the agreement upon breach

The correct answer is: Define the protection period in the original listing agreement

To enforce a protective clause in a listing agreement, defining the protection period in the original listing agreement is essential. A protective clause often refers to a provision that safeguards the broker's right to earn a commission after the listing has expired if certain conditions are met, such as if the seller sells the property to a buyer who was introduced to the property during the listing period. The protection period specifies the timeframe in which the broker is entitled to commission if a sale occurs. Without clearly defining this period in the original listing agreement, the broker may lack the necessary legal grounds to enforce the protective clause later. If the timeframe is vague, it can lead to disputes regarding commission entitlement, making it challenging for the broker to claim their earned commission correctly. Thus, including a well-defined protection period directly in the listing reinforces the broker's rights and expectations in the transaction.