What Is a Safety Protection Clause?
Definition & Examples of a Safety Protection Clause
A listing agreement entitles a real estate broker or agent to a commission if the property sells to any buyer who was introduced by the agent. The safety protection clause states the broker is entitled to this commission even if the sale occurs after that broker's listing agreement expires.
Learn how when the safety protection clause applies and how it protects real estate brokers from fraud.
What Is a Safety Protection Clause?
An exclusive right-to-sell listing agreement includes a clause that entitles the real estate broker to a commission after the listing expires or is canceled. The clause applies in the event that a buyer who was introduced to the property by the listing broker later purchases the property after the listing has been withdrawn or expired.
A listing agreement is a type of employment contract between the broker and the seller which entitles the broker to compensation for their work.
A safety protection clause allows the broker to receive compensation if their work to sell the house is successful, even if that sale occurs after the end of the listing agreement.
Alternate names: broker protection clause, extension clause, extender clause, broker safety clause, tail clause, procuring clause
How a Safety Protection Clause Works
The safety protection clause in a listing agreement states that the seller still owes the broker a commission if a buyer tries to go around the broker and go directly to the seller. This protects the broker from collusion between sellers and buyers to save the seller the cost of real estate commission.
The safety protection clause generally includes a limit on the time that the broker can continue to collect a commission. The length of time can vary.
The safety protection clause applies if the broker was the one who introduced the buyer to the property. When the listing agreement expires, the broker must also send notice to the seller with each buyer's name within a certain number of days after the property is off the market.
The safety clause generally doesn't apply if:
- It's not checked on the listing agreement.
- The broker doesn't give written notice to the seller in a timely manner.
- The seller and buyer already knew each other.
Hiring a Second Broker
If the seller immediately enters into a new listing with a new broker, the clause should state that the seller will only owe a commission to the second broker, even if the property is sold to a buyer who was produced by the original broker.
If the original broker can show that they were responsible for originally procuring the buyer, they may be able entitled to a portion of the commission. The seller will not have to pay two commissions.
Open listings can be tricky for real estate agents to navigate. In this case, the seller agrees to pay the commission to the agent who brings an offer from a qualified, ready, and willing buyer.
An open listing is similar to a for sale by owner (FSBO) property when it comes to getting the seller to pay commission.
A real estate agent should consider presenting the seller with a one-party showing listing agreement to protect the commission if they find an open listing or an FSBO property they want to show. The agent and the seller can negotiate the number of days, weeks, or months that the clause is applicable.
Do I Need a Safety Protection Clause?
If you are a broker working with a seller, you will want to ensure that a safety protection clause is included in your listing agreement. This ensures that you will receive fair compensation for the work you did, even if a sale occurs after the agreement expires.
If you are a seller, your broker will likely present you with an agreement that includes a safety protection clause. Though this protects the broker, rather than you, it does not take advantage of you. It simply ensures that the broker you work with will receive the commission they are owed for their work in procuring a buyer for your property.
- A safety protection clause in a listing agreement entitles the real estate broker or agent to a commission after the listing expires or is canceled.
- This applies in situations when the eventual buyer was first introduced to the property or seller by the broker.
- A safety protection clause is designed to ensure that a broker receives fair compensation for their work and to prevent collusion between buyers and sellers.
- The broker must send notice to the seller with each buyer's name within a certain number of days after the property is off the market in order for the clause to apply.
Nolo. "Signing a Listing Agreement with Your Real Estate Agent." Accessed Aug. 14, 2020.
Provident Law. "Procuring Cause and the Listing Agreement’s Broker Protection Clause." Accessed Aug. 14, 2020.