When hiring a real estate agent (or, more specifically, their brokerage), you’re required to sign many documents. A primary function of these documents is to establish the time frame for your relationship and a period afterwards that some terms and conditions still apply –aka—the holdover period.
What is a Holdover clause?
During the holdover period, if you purchase real estate that was introduced to you by the real estate brokerage while under contract or sell your home to a buyer who came to know of your property while it was previously listed, the real estate brokerage you were once under contract with is entitled to compensation equal to that stated in the original agreement.
Does a holdover clause apply if I sign with a new real estate agent?
This no longer applies to the one exception if you, the buyer or seller, sign an agreement with another brokerage –even if this new contract exists DURING the original holdover period. In this case, the new brokerage is paid, not the previous. However, if the compensation paid to the new brokerage is less than the amount you originally agreed to pay the first brokerage, the first brokerage is entitled to the difference. If the new amount is the same or more, the first brokerage receives no compensation.
Adrian explains his opinion on the clause here: