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RECOMMENDATIONS REGARDING NEW CAR FORMS ARISING OUT OF THE NAR SETTLEMENT

by | Jun 21, 2024 | 12/4 Risk Management Webinar Recording 12.13, Agency, Agent Liability, Uncategorized

BROKER RISK MANAGEMENT

WEEKLY PRACTICE TIP

 

ALERT: CAR HAS JUST ANNOUNCED THAT THEY ARE POSTPONING THE RELEASE OF THE 21 FORMS RELATED TO THE NAR SETTLEMENT BECAUSE OF AN INQUIRY FROM THE DEPARTMENT OF JUSTICE REGARDING THOSE FORMS.  BRM HAD THIS TIP PREPARED AND READY TO PUBLISH TODAY.  WE HAVE DECIDED TO PROCEED WITH THIS TIP TODAY, BUT KEEP IN MIND THAT CAR DOES NOT KNOW WHEN THESE FORMS WILL BE RELEASED AND WHETHER OR HOW MAY CHANGE.

 

On June 3, 2024, Broker Risk Management (“BRM”) provided a webinar regarding CAR’s new and revised forms.  As discussed during that webinar, CAR has written and revised a number of forms to comport with the NAR settlement.  BRM has received numerous inquiries from clients regarding which forms are mandatory and which forms BRM recommends that its clients use.  This tip addresses BRM’s recommendations regarding the new and revised CAR forms.

 

CAR created 21 new and revised forms to comply with the NAR Settlement Agreement. While you may ultimately use all or most of those forms, there are several with which agents must be familiar as soon as the forms are released. Here are the forms you most likely will be using with some frequency immediately and should spend some time learning to use them:

 

  1. Broker Compensation Advisory (BCA) – This form is released and is currently available. It is a good primer for agents talking to sellers (see Paragraph 1) and regarding buyer agent compensation and related forms (Paragraph 3).

 

  1. Residential Listing Agreement (RLA) – Agents are recommended to review and be familiar particularly with the grid on Page 1 so they are familiar with how it works.

 

  1. Open House Visitor Non-Agency Disclosure (OHNA) – This form should be used at open houses. An excellent summary of this form and handling of open houses is included on CAR’s summary “Open Houses in an Post-NAR Settlement World” at:

https://www.car.org/en/aboutus/mediacenter/news/-/media/F7A8979125D44A4885B1F5877F2692E1.ashx

 

  1. Buyer Representation and Broker Compensation Agreement (BRBC) – Agents should be familiar with this form and use it with buyers. This form will be mandatory in early August 2024 once your MLS changes to the NAR Settlement requirements.

 

  1. Limited Property Representation and Broker Compensation Agreement (LPRBC) – This is a short-term non-exclusive buyer representation agreement to be used at an open house if an unrepresented buyer wants the agent holding the home open to represent them. It can also be used separate from an open house situation for a limited number of properties.

 

  1. Cooperating Broker Compensation Agreement (CBC) – This form should be used where a listing broker has advertised or told a buyer’s agent that the seller has authorized the listing broker to offer the buyer agent compensation. It should be used prior to presenting an offer.  It should not be delivered with an offer since the seller can sign the RPA ratifying the contract and refuse to sign the CBC.

 

  1. Seller Payment of Buyer Broker (SPBB) – This form is to be used where there is a signed buyer representation agreement and 3G(3) on the RPA is checked. The amount the buyer’s agent is seeking is on the first line.  If the seller agrees to compensate buyer’s broker that amount, the seller can sign the SPBB and return it with a signed offer or Seller Counter Offer (SCO).  If the seller does not agree, the seller can counter out the SPBB by stating in an SCO “The SPBB is hereby deleted;” or counter it out on the SCO but state how much the seller is willing to pay the buyer’s agent.

 

TWO OPTIONAL FORMS

 

Two optional forms include the Buyer Financial and Personal Information (BFPI) and Buyer Identification of Preferences and Priorities (BIPP).

 

Agents should be cautioned when using these forms.  These forms were created by CAR as tools for agents working with buyers to obtain sufficient information from buyers to create a trusting relationship leading to the execution of a BRBC.  However, when using the BFPI form, buyers’ agents need to ensure that they protect the privacy and confidentiality of that form.  Buyers’ agents need to ensure the form is properly secured so as to protect buyers’ confidential information.

 

Buyers’ agents also need to use caution when using the BIPP form.  While that form can be a useful tool to establishing a buyers’ wants and needs, if an agent forgets or ignores the information provided by the buyer, a buyers’ agent could create liability for themselves.  If a buyer specifies that there is a matter of concern and the agent fails to address that concern, it could create liability on the part of the agent.  For example, a buyer advises an agent that their prior home had a slide and they do not want to buy a property with soils issues.  If the agent forgets to advise the buyer in writing to have a soil inspection for the new property, the agent could be creating liability for themselves.

 

RESOURCE:

 

CAR has created a list of helpful quick guides on the BRBC and other forms and issues at “SMART ZONE Updated Business Practices” which you can access at:

 

https://www.smartzonecar.org/updated-business-practices

 

WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS.  This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents.  It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP.  The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices