This form is used by an owner’s agent when their employment has expired under a listing agreement for the sale or lease of a property containing a safety clause calling for the payment of a fee on a purchase or lease of the property within one year after expiration by a prospect the broker negotiated with during the listing period, to identify these prospective buyers or tenants of the property to the owner.
The safety clause
Consider a broker employed by a seller under a listing agreement. The listing, whether open or exclusive, contains a safety clause entitling the broker to the agreed fee, when:
- a person has contact with the broker (or their agent) regarding the property during the listing period, called solicitations;
- the broker treats the person as a prospective buyer by providing the person with information about the property, legally called negotiations;
- negotiations with the prospective buyer terminate without resulting in a sale;
- on expiration of the listing period, the broker registers the prospective buyer by name with the seller as a prospective buyer [See RPI Form 122]; and
- the registered prospective buyer and the seller, with or without involving the broker, later commence negotiations within a specified time period following the expiration of the listing, called the safety period, and ultimately complete a sale of the property.
During the listing period, a seller’s agent has contact with numerous prospective buyers. A diligent agent documents their communications with each individual buyer, noting the property information given to them, as well as to any buyer’s agent, on a File Activity Sheet in their listing file. [See RPI Form 520]
The agent also adds each prospective buyer’s name, address and phone number to the list of prospective buyers for the property on an Identification of Prospective Buyers form in the listing file. [See RPI Form 122]
When the listing expires and the property remains unsold, the agent sends the seller the list of prospective buyers on the Identification of Prospective Buyers form they have maintained and closes their client’s file. The list includes all those buyers who, during the listing period, were in contact with and received information about the property from the broker, their agents or through a buyer’s broker. [See RPI Form 122]
A safety clause is located in the fee provision of a listing agreement. It provides an additional period of time after the listing expires for a broker to earn a fee for the time, talent and money the broker and their agent invested during the listing period in their effort to market the listed property and locate a buyer.
The clause preserves the seller’s agent’s expectations of earnings for reviewing the property with prospective buyers during the listing period when the prospective buyers become disinterested, break off negotiations and later reappear after the listing expires to buy the property.
Thus, the broker is assured a fee under the safety clause when:
- the seller’s agent provides property information to prospective buyers during the listing period;
- the seller is notified of the identification of the prospective buyers as soon as possible after termination of the listing [See RPI Form 122]; and
- a prospective buyer named on the list as one the seller’s agent provided information to during the safety period acquires the property.
Perfecting the right to a fee for work done
To collect a fee under the safety clause, the broker has the burden of showing how they perfected their right to the fee.
To perfect the right to collect a fee under the safety clause, the seller’s agent needs to:
- provide information about the listed property to any prospective buyers or the buyer’s brokers in which the seller’s agent has contact;
- document dealings with prospective buyers by maintaining a File Activity Sheet in a listing file [See RPI Form 520]; and
- register the prospective buyers with the seller on termination of the listing by providing the seller with a List of Prospective Buyers in a timely manner (e.g., within 21 days). [See RPI Form 122]
The identification of prospective buyers/tenants
An owner’s agent uses the Identification of Prospective Buyers/Tenants — On Expiration of Listing published by Realty Publications, Inc. (RPI) when their employment has expired under a listing agreement for the sale or lease of a property containing a safety clause calling for the payment of a fee on a purchase or lease of the property within one year after expiration by a prospect the broker negotiated with during the listing period. The form allows the agent to identify these prospective buyers or tenants of the property to the owner. [See RPI Form 122]
The Identification of Prospective Buyers/Tenants form contains:
- Facts, including which type of agreement the form is an addendum for, either:
- a Seller’s Listing Agreement [See RPI Form 102];
- an Exclusive Authorization to Lease Property [See RPI Form 110]; or
- a blank space to list another listing agreement; and
- the date the listing was entered into and the property address for the described real estate [See RPI Form 122 §1]; and
- the identities of prospective buyers or tenants the broker solicited and negotiated with for the purchase or lease of the real estate. [See RPI Form 122 §2]
The owner is obligated under the listing agreement to pay a brokerage fee when, within one year after expiration of the agreement, the owner enters into a negotiations which result in the sale or lease of the real estate with any of the named prospective buyers or tenants. [See RPI Form 122 §2.2]
Similar to the Identification of Prospective Buyers/Tenants form, the Identification of Qualifying Properties form published by RPI is used by the buyer’s agent when their employment has expired under a listing agreement. It also contains a safety clause calling for the payment of a fee on the client’s purchase within one year after expiration of a property presented to the buyer during the listing period. It allows the agent to identify prospective properties the broker brought to the client’s attention. [See RPI Form 123]
Form navigation page published 04-2021. Updated 09-2022.
Form last revised 2016.
Form-of-the-Week: Identification of Prospective Buyers and File Activity Sheet – Forms 122 and 520
Form-of-the-Week: Expired listings — Forms 122, 123 and 123-1
Client Q&A: Do I owe a fee if a buyer my broker located makes an offer after the listing expires?
Book: Real Estate Practice, Chapter 9: The exclusive right-to-sell listing agreement
