Question

Seller Paul is represented by broker Art. Paul's house was just destroyed by a tornado. Which statement is True?

A) Paul is still obligated to pay the commission to Art
B) The listing agreement is automatically terminated
C) Art is no longer responsible for marketing the property
D) The buyer is still obligated to purchase the property

Answer 1

In this scenario, the listing agreement is automatically terminated and neither Paul nor the buyer are obligated to fulfill their previous commitments.

Step-by-step explanation:

In this scenario, since Paul's house was destroyed by a tornado, the listing agreement is automatically terminated. This means that Paul is no longer obligated to pay the commission to Art, the broker representing him. The destruction of the house renders the agreement null and void.

Additionally, the buyer is also no longer obligated to purchase the property. The destruction of the house fundamentally changes the condition and value of the property, rendering the buyer's previous commitment null and void as well.

Therefore, option B) The listing agreement is automatically terminated is the correct statement.