Question 19

The clause designed to ensure that a broker will receive a commission after the listing has expired is called an extension or 'tail' clause.

An extension or 'tail' clause allows a broker to collect a commission if a transaction is finalized with a buyer who was introduced during the listing period, even after the listing agreement has expired.

A) an acceleration clause

An acceleration clause is typically related to loan agreements, allowing a lender to demand repayment of the entire loan if certain conditions are met. This clause does not pertain to real estate listings or broker commissions, making it incorrect in this context.

B) an alienation clause

An alienation clause is a provision that allows a lender to demand full repayment of a loan if the property is sold or transferred to another party. This clause is not relevant to broker commissions or the situation described in the question.

C) a coinsurance clause

A coinsurance clause is related to insurance policies, requiring the insured to maintain a certain level of coverage to avoid penalties. This term does not apply to real estate transactions or the commission structure for brokers, rendering it incorrect.

D) an extension or 'tail' clause

An extension or 'tail' clause is specifically designed to protect the broker's right to a commission if a deal is completed with a buyer identified during the listing period, even after the agreement has ended. This makes it the correct answer to the question.

Conclusion

The extension or 'tail' clause is essential in ensuring that brokers receive their earned commissions even after the expiration of the listing agreement. Other options, such as acceleration, alienation, and coinsurance clauses, are irrelevant to broker commissions and do not apply to the context of real estate listings. Thus, option D stands out as the only appropriate choice.