Tail Clause / Tail Period
A provision of the listing agreement that protects the broker after the engagement expires. If a transaction closes with a buyer identified or introduced during the engagement, the broker still collects their fee even after the agreement has ended.
Definition
The tail clause — also called the tail period — is a standard provision in business-brokerage listing agreements. It protects the broker against a situation where the seller would wait for the engagement to end and then close directly with a buyer the broker had identified and introduced.
In French-language Quebec documentation, you’ll see clause de queue used for the same concept.
Why the tail clause exists
A broker invests hundreds of hours preparing the sale, identifying buyers, and running negotiations. Without a tail clause, a seller could theoretically:
- Let the broker present the business to 20 buyers
- Not renew the engagement
- Close directly with one of those buyers without paying any fee
The tail clause prevents that by providing that the success fee remains payable if the transaction closes with a buyer identified during the engagement.
Typical elements
- Duration: 6 to 24 months after the engagement ends (12 months is common)
- Scope: applies only to buyers identified or introduced by the broker during the engagement
- List: the broker typically provides a list of the covered buyers at the end of the engagement
What every seller should know
- The tail clause is standard — its legitimacy depends mostly on its duration, scope, and the precise definition of the buyers covered
- Check the duration and scope before signing the listing agreement: a 12-month tail on a defined list of buyers is reasonable; a 36-month tail covering “any potential buyer” is excessive
- If you change brokers, make sure the tail clauses of the two agreements don’t overlap on the same buyers