Can a licensee include a "hold harmless clause" in a transaction?

A hold harmless clause is a provision in a contract where one party agrees not to hold the other party liable for any damages or losses that may arise. In real estate transactions, including Minnesota, the inclusion of such a clause is typically limited and often requires certain parties to be directly involved in the agreement.

In this context, a licensee, who operates as a representative in a transaction (rather than as a principal or the one directly involved in the ownership or rights of the property), does not have the authority to unilaterally include a hold harmless clause. Only the principals—those directly participating in the transaction—can negotiate and agree on that clause as part of their formal agreement.

This understanding is crucial because it emphasizes the role and limitations of a licensee in real estate transactions. It illustrates that while a licensee can facilitate negotiations and advise their clients, they cannot independently bind parties to legal clauses or terms that significantly affect liability without the express consent and acknowledgment of the principals in the transaction. Thus, the correct answer points to the necessity for a licensee to be a principal for the inclusion of such a clause to be valid.