In a listing agreement, which situation is LEAST likely to incur a penalty for termination?

The situation in which the client and agent mutually agree to terminate the listing agreement is least likely to incur a penalty because both parties are voluntarily choosing to end their contract. Mutual agreement signifies that there is no conflict or dissatisfaction from either side regarding the termination of the agreement, and they are coordinating to dissolve the terms amicably. This approach avoids disputes and potential penalties that could arise from unilaterally opting out of the contract.

Termination penalties are more common in situations where one party breaches the agreement or acts unilaterally without the consent of the other. In contrast, situations such as a client switching agents or an agent not being paid for their commission may lead to disputes, as these actions could be interpreted as violations of the contract terms, resulting in financial repercussions or legal ramifications. Additionally, if a property sells before the contract ends, while it might not necessarily incur a penalty on its own, the circumstances surrounding the termination might still implicate other considerations like commissions owed depending on the agreements in place.