Release Date: 08/31/2017
QUESTION: I noticed that a new paragraph 4 has been added to Standard Form 720 - the "Termination of Agency Agreement and Release". The new paragraph has the heading "Protection Period Preserved". Can you explain what is being preserved?
ANSWER: If an agent and a client signed the old version of Form 720, and thereby agreed to terminate an existing agency agreement, the form provided that both parties agreed to release each other from any and all claims arising from that agency agreement. It was not uncommon for listing agents to learn that, shortly after signing the old termination form, their client had entered into a contract to sell their property to a person the agent had dealt with during the term of his listing. Similarly, it was not uncommon for selling agents to learn that, shortly after signing the old termination form, their buyer-client had entered into a contract to purchase property that the agent had introduced to the buyer during the term of their agreement.
Form 720 was revised in an effort to protect agents in both of these situations. The added paragraph states that notwithstanding the release language elsewhere in the Termination of Agency Agreement and Release, the parties agree that their respective rights and obligations under any "Protection Period" set forth in their agency agreement shall remain in full force and effect for the specified period of time following the "Effective Date" of the Termination Agreement.
Listing agents should keep in mind that if they sign the new Form 720, and their seller-client then engages another real estate broker to list their property, they will not be entitled to a commission even if the property is sold during the Protection Period. This possibility is specifically addressed in paragraph 7(b)(iii) of the Exclusive Right to Sell Listing Agreement (Standard Form 101). In other words, the new Termination form does not enhance the listing agent's rights under their listing agreement, it merely protects and preserves whatever rights the listing agent has pursuant to the "Protection Period" section of the that agreement.
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