BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
JUNE C.A.R. NEW AND REVISED FORMS – NEW TRANSACTION FORMS
Possible Representation of More Than One Buyer (PRBS-B) – Bundled with the buyer representation agreements.
Possible Representation of More Than One Seller (PRBS-S) – Bundled with the listings.
Septic, Well, Propane, and Property Boundaries Inspection and Allocation of Costs Addendum (SWPI-C) Converted the SWPI form into this form to address allocating various costs related to septic, well, propane tanks, and property boundaries.
Septic, Well, and Propane Tank Questionnaire (SWPI-Q) – This form is a questionnaire to Septic Systems, Wells, and Propane Tanks.
REVISED SALE TRANSACTION FORMS
LISTING AGREEMENT FORMS
Residential Listing Agreement – Exclusive (RLA) – Language is added to the unrepresented buyer paragraph to clarify when and why extra compensation may be agreed to and advises broker to give an unrepresented buyer a Buyer Non-Agency form. For dual agency, agents will need an agreement with the buyer to earn compensation for the buyer’s side of the transaction. Clarified that social media is included in advertising images.
Listing Forms Conformed to RLA
- CLA Commercial and Residential Income Listing Agreement
- VLL Vacant Land Listing
- RLAN Residential Listing Agreement – Open
- RLASR Residential Listing Agreement – Seller Reserved
- RLASR also added clarifying language related compensation not being earned if seller finds their own buyer.
BUYER REPRESENTATION AND RELATED FORM
- Buyer Representation and Broker Compensation Agreement (BRBC) – Added ¶4B(5) clarifying that compensation is earned if buyer assigns the purchase agreement.
- Notice of Broker Involved Properties (NBIP) – Modified to apply to a tenant representation agreement.
PURCHASE AGREEMENT FORMS
California Residential Purchase Agreement & Joint Escrow Instructions (RPA)
- ¶3G(2) Modified “Other Seller Credits/Payments” to be used for items other than closing costs or buyer broker compensation.
- ¶3L(2) Modified the appraisal contingency to have an option to make the contingency based upon an appraisal gap.
- ¶3Q16) Added “Septic, Well, Propane Tank, or Property Boundaries” as an option under allocation of costs (new form SWPI-C).
- ¶8(a) Clarified that loan contingency cannot be used if buyer is unable to obtain insurance.
- ¶11O Added a disclosure for Septic, Well, or Propane Tank.
- ¶14(G) Clarified that deposit should be returned to buyer, even after DCE, if buyer is trying to satisfy a contingency.
- ¶19(D) Added requirement to cooperate with any FinCEN reporting.
Purchase Agreement Forms Conformed to RPA Changes
- ABSPA Already-Built Subdivision Purchase Agreement And Joint Escrow Instruction
- BPA Business Purchase Agreement 12/25 Conformed to changes in RPA.
- NCPA New Construction Residential Purchase Agreement and Joint Escrow Instructions
- CCSPA Condominium Conversion Subdivision Purchase Agreement & Joint Escrow Instr.
- CPA Commercial Property Purchase Agreement and Joint Escrow Instructions
- VLPA Vacant Land Purchase Agreement and Joint Escrow Instructions
- RIPA Residential Income Property Purchase Agreement and Joint Escrow Instructions
- RIPA: Also, CAR added a paragraph 7F for assignment of any tenancies.
COUNTER OFFER FORMS – BCO, SCO and SMCO
On all three Counter Offer forms:
- CAR has clarified the procedure for including liquidated damages and/or arbitration when not all parties initialed in the offer,
- Added an ability to add form LDAA (see explanation below)
- Simplified the explanation for when an appraisal gap is used for the appraisal contingency.
- Boxed late acceptance to emphasize that it is separate from the rest of the form.
DISCLOSURES
Real Estate Transfer Disclosure Statement (TDS) Added a reference to a unit number so it can be more easily used when there are multiple units.
Seller Property Questionnaire (SPQ)
- Added a reference to a unit number so it can be more easily used when there are multiple units.
- Reformatted and expanded “Documents” (paragraph 5).
- Added a reference to the SWPI-Q (new questionnaire form) when there is a septic, well, or propane tank.
- Added a requirement to provide any photographs if seller indicates that it is tenant occupied.
Exempt Seller Disclosure (ESD) Added a paragraph to explain that while seller may be exempt from TDS, they might still have to comply with water heater and smoke detector requirements.
OTHER REVISED TRANSACTION FORMS
Confirmation of Real Estate Agency Relationship (AC) – Adjusted the language referring to agency confirmation in the purchase agreement. Made the form applicable to agency confirmation in a lease for more than one year.
Assignment of Agreement Addendum (AOAA) – Addressed who would represent the assignee for the remainder of the transaction. Defaulted to the Broker continuing to be the agent in the transaction.
California Consumer Privacy Act Advisory CCPA – Modified form to better describe the law, which has had adjustments over time. Added a paragraph to discuss with broker, whether the law applies and what the requirements are.
Liquidated Damages and Arbitration Additional Signature Addendum (LDAA) – Modified the form to be used not only with “Additional Signature Addendum,” but also with Counter Offers or Amendments.
Request For Repair (RR) Added clarifying language about when the last section of the form should be used and signed.
Seller Advisory (SA) Added paragraphs for the possibility of FinCEN reporting requirements, wholesale buyers, and open houses.
Seller’s Purchase of Replacement Property SPRP) – Added a requirement to provide proof of replacement property when the seller indicates they don’t require a contingency for finding a replacement property.
Seller’s Vacant Land Advisory (SVLA) Added paragraphs for the possibility of FinCEN reporting requirements.
Tenant Occupied Property Addendum (TOPA) – Added a paragraph for assignment of tenancies. Reference to RCJC-TOPA (new form). Added the ability to check a box for RCJC-TOPA and RPOA. Added language regarding security deposit and requirements for photographs.
NEW LEASE RENTAL FORM
Rent Cap and Just Cause Addendum – Tenant Occupied Property Addendum (RCJC-TOPA) – This form is for use with the TOPA form and is for informational purposes only. If the buyer discovers that it was not part of the rental documents, the form has a check box to request that seller incorporate it into the rental agreement with the current tenant.
REVISED LEASE RENTAL FORMS
Commercial Lease Agreement (CL) – Added a paragraph for the parties to agree if tenant will be responsible for replacement of certain items/systems. Also, added Broker Compensation paragraph and modified Agency Confirmation to conform to other lease forms.
Lease Rental Commission Agreement (LCA) – Conformed compensation paragraphs to Lease Listing Agreement (LL). Added “Other Terms” paragraph.
Lease Listing Agreement Exclusive Authorization To Lease Or Rent (LL) – Added a check box and initial requirement to create an obligation for the rental property owner to pay a commission if they sell the property to the tenant in the future.
Residential Lease or Month-to-Month Rental Agreement (RLMM) – Added check box in ¶47 to add the “Pool, Hot Tub and Spa Addendum” to the RLMM.
Rental Property Owner Advisory (RPOA) – Add a section related to successor housing provider requirements for notices to tenant and other issues related to security deposit procedures.
Tenant Representation and Broker Compensation Agreement (TRBC) – Changed the default to a nonexclusive agreement. Conformed compensation paragraph to mirror BRBC, including a continuation period.
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 practice