RES exam question on Regulation & the CEA Framework: A seller is choosing between an exclusive and an open listing
A seller is choosing between an exclusive and an open listing. Which is/are correct? (i) Under an exclusive agreement the appointed agency earns its commission even if the seller finds the buyer himself. (ii) CEA caps the validity period of an exclusive agreement at three months, renewable. (iii) Under an open listing the seller may appoint several agencies, and the one who closes is paid. (iv) CEA prescribes the commission rate for an exclusive agreement.
- A(i), (ii) and (iii) only
- B(ii), (iii) and (iv) only
- C(i) and (iii) only
- D(i), (ii), (iii) and (iv)
Show answer & explanation
Answer
A. (i), (ii) and (iii) only
Explanation
Issue: what each arrangement commits the seller to. Rule: under an exclusive agreement the appointed agency earns during the validity period even where the property is transacted through another agency or by the seller himself, and for three months afterwards where the buyer was one it introduced during the term. CEA caps the validity period at three months, renewable on expiry, and requires a written marketing plan and regular updates. An open listing leaves the seller free to appoint several agencies, with the commission going to whichever closes. Conclusion: (i), (ii) and (iii) are correct.
Why the other options are wrong
- Application: (iv) is wrong — CEA prescribes no commission rates at all; they are negotiated and recorded in the prescribed agreement.
Study the concept behind this question: CEA Forms 1–8 Explained: Estate Agency Agreements & Commission
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