This form is used by a buyer’s or tenant’s agent when their employment has expired under a listing agreement to buy or lease property containing a safety clause calling for the payment of a fee on the client’s purchase or lease within one year after expiration of a property presented to the buyer or tenant during the listing period, to identify prospective properties the broker brought to the attention of the client.
The safety clause
A safety clause in a listing agreement entitles the broker to the agreed fee, when:
- an individual has direct contact with the broker (or their agent) regarding the property during the listing period, called solicitations;
- the broker treats the individual as a prospective buyer due to their inquiries or conduct by handing them a package of information about the property, called negotiations;
- negotiations with the individual terminate without resulting in their entering into an agreement to purchase the property;
- the listing period expires and the broker timely registers the individual by name with the seller as a prospective buyer; and
- the individual and the seller, with or without the broker’s further involvement, later commence negotiations within an agreed-to period following the expiration of the listing, called the safety period, and eventually complete a sale of the property.
A safety clause is part of the fee provision in a listing agreement. Both the open and exclusive types of seller’s and buyer’s listing agreements contain safety clause provisions. [See RPI Form 102 §3.1(d); see RPI Form 103 §4.1(c)]
A safety clause in the fee provision of a listing agreement provides an additional period of time after the listing period expires for a broker to earn a fee. [See RPI e-book Real Estate Practice, Chapter 12]
The safety clause for seller’s agents
The safety clause imposes an obligation on the seller to pay a fee on a sale which results from negotiations with registered prospective buyers handled by anyone within the safety period. [See RPI Form 123-1]
However, several crucial activities need to be performed by the seller’s agent to perfect the broker’s right to a fee under the safety clause, including:
- providing information about the listed property to any prospective buyers the broker or buyer’s brokers have contact with;
- documenting dealings with prospective buyers by maintaining a File Activity Sheet in a property listing file [See RPI Form 520]; and
- registering the prospective buyers with the seller on termination of the listing with the seller by providing the seller with a List of Prospective Buyers in a timely manner (e.g., within 21 days). [See RPI Form 122]
The safety clause for buyer’s agents
Likewise, under the safety clause in a buyer’s listing agreement, the buyer’s broker is entitled to collect a fee within an agreed-to period after the expiration of the buyer’s listing when:
- information specific to the property was provided to the buyer by the buyer’s agent during the listing period;
- on expiration of the buyer’s listing, the buyer is handed an itemized list which identifies those properties the buyer’s agent brought to the buyer’s attention needed to perfect the buyer’s broker’s right to a fee [See RPI Form 123];
- the buyer entered into negotiations with the owner of a registered property; and
- the safety-period negotiations ultimately result in the buyer acquiring an interest in the property.
Although the buyer under a listing agreement promises to pay a full broker fee on the acquisition of property, in practice, the buyer will nearly always close the purchase without directly paying the promised broker fee. It is the seller who typically pays the fee the buyer has promised their agent. [See RPI e-book Real Estate Practice, Chapter 15]
The identification of qualifying properties
A buyer’s or tenant’s agent uses the Identification of Qualifying Properties published by RPI when their employment has expired under a listing agreement to buy or lease property containing a safety clause calling for the payment of a fee on the client’s purchase or lease within one year after expiration of a property presented to the buyer or tenant during the listing period. The form allows the agent to identify prospective properties the broker brought to the attention of the client. [See RPI Form 123]
The Identification of Qualifying Properties form contains:
- Facts, including which type of agreement the form is an addendum for, either:
- a Buyer’s Listing Agreement [See RPI Form 103]; or
- an Exclusive Authorization to Locate Space [See RPI Form 111];
- the date the listing was entered into and the property address for the described real estate [See RPI Form 123 §1]; and
- the identities of properties qualifying as the type sought by the buyer or tenant which the broker located, investigated, solicitated or negotiated for acquisition by the buyer or tenant. [See RPI Form 123 §2]
The buyer or tenant is obligated under the listing agreement to pay a brokerage fee when, within one year after termination of the agreement, the buyer or tenant enters into negotiations which result in the acquisition or lease of any of the named addresses provided on the form. [See RPI Form 123 §2.2]
Form navigation page published 07-2015. Updated 09-2022.
Form updated 2016.
Form-of-the-Week: Expired listings — Forms 122, 123 and 123-1
Form-of-the-Week: Demand for payment of a fee — Forms 123 and 123-1
Form-of-the-Week: The Buyer’s Listing Agreement — Form 103 and 103-1
Brokerage Reminder: The buyer’s listing — the listed buyer benefits
Recent Case Decision: Can a buyer’s broker collect a fee from their buyer without entering into a written listing agreement?
Book: Real Estate Practice, Chapter 12: The safety clause
Book: Real Estate Practice, Chapter 15: Operating under a buyer’s listing
Book: Real Estate Practice, Chapter 16: The buyer’s listing agreement
