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Safety Clause / Protection Clause

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Definition: Safety Clause. Exclusive Right to Sell Listing Agreements contain a clause that entitle the real estate broker to a commission after the listing expires or is canceled. This applies only in the event a buyer who was introduced to the property by the listing broker purchases the property after the listing has been withdrawn or expired. The broker, to comply with the terms of the listing agreement, typically needs to send notice with each buyer's name within a certain number of days to the seller.

The clause "protects" the broker from collusion between sellers and buyers. It says if a buyer tries to go around the broker and go directly to the seller, the seller still owes a commission, providing the broker has followed procedure.

Generally, there is a time limitation entered on the contract in conjunction with this safety clause, which can vary between 3 days to 360 days after the listing has expired or is withdrawn.

If that clause is not checked on the listing agreement, then generally it does not apply. If the broker does not give written notice to the seller, then the broker has not followed procedure and will likely not be able to collect a commission. Contact a real estate lawyer for more advice.

At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

Examples:
Broker Jones showed buyer Russell Crowe's home in Malibu. A few days later, the buyer, Mr. Pitt, called Mr. Crowe and said, "If you cancel your listing with Broker Jones, I will buy this house less the commission." The buyer figured this would save him money. But instead, Mr. Crowe had to pay Broker Jones a commission because Broker Jones followed procedure and notified Mr. Crowe of his obligation to pay if the buyer purchased the property.

Mr. Crowe was so upset that he canceled the transaction with Brad Pitt and suggested that Pitt move to San Diego or somewhere else equally as warm.

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