Hawaii Pre-Licensing National Practice Exam

In what situation can a broker rescind a listing contract?

1. When the broker receives a better offer

2. Following the terms of the listing contract

3. When the property is sold

4. If the owner requests it

The correct answer is: Following the terms of the listing contract

The situation in which a broker can rescind a listing contract is when following the terms of the listing contract itself allows for such action. Typically, a listing agreement outlines the specific conditions under which it can be terminated, such as the expiration of the contract period, fulfillment of its purpose (like selling the property), or mutual agreement between the broker and the owner. If the terms of the listing agreement specify conditions under which the broker can terminate the contract, then the broker is within their legal rights to rescind it. This ensures that both parties adhere to the established guidelines, which help prevent disputes and misunderstandings. In contrast, simply receiving a better offer does not provide the broker with the authority to rescind an existing contract, as this would contradict their obligations to the current listing. Similarly, a property being sold would typically fulfill the contract rather than serve as grounds for rescission, and the owner's request would need to align with the terms set forth in the listing agreement to be valid for rescission.