CAR has announced that it will be releasing one new form and one revised form this week. This special Weekly Practice Tip will summarize these forms and provide guidance on how brokerages should use them.
A. NEW CAR FORM FOR FEBRUARY 2022: DESIGNATED ELECTRONIC DELIVERY ADDRESS AMENDMENT (“DEDA”)
One of the new features in the 2021 CAR RPA is the Designated Electronic Delivery Address(es) section included in both the Buyer’s Brokerage and the Seller’s Brokerage information found on page 16:
There are three potential problems with these provisions. First, if the electronic delivery information is not included in 5A and/or 5B, then Delivery of the CAR RPA and other documents cannot be perfected by email or any other electronic means of delivery. The simple omission of including the electronic delivery address could severely hamper the standard means of handling transactions.
Second, if the box is checked at the end of 5A and/or 5B, even if there are multiple email addresses for the Agents, Delivery of the CAR RPA and other documents can only be perfected by using the specified “Alternate” electronic delivery address. Agents must carefully examine the information in 5A and/or 5B before attempting to email any documents since checking the box could limit how documents may be delivered.
Third, if after the RPA is Accepted, the Buyer’s Broker and/or the Seller’s Broker wish to change the information in 5A and/or 5B, there was no mechanism to effectuate the change.
The Designated Electronic Delivery Address Amendment (“DEDA”) was created to enable Brokers to either establish a new electronic delivery address (if one was not originally included in 5A and/or 5B) or to change whatever designated electronic delivery information was originally included in 5A and/or 5B.
However, just as is true in the RPA, the DEDA allows Brokers to limit which electronic delivery address can be used.
PRACTICE TIPS FOR THE DEDA:
- The DEDA is not a required form; it is only needed if either of the Parties wants to add or change the information in Section 5A and/or 5B.
- Whether or not the DEDA form is used, Agents need to pay close attention to whether electronic delivery is permissible, and which electronic delivery address(es) can be used.
B. REVISED CAR FORM FOR FEBRUARY 2022: PROBATE AGREEMENT PURCHASE ADDENDUM (“PA-PA”)
As part of its revisions to the 2021 CAR RPA, CAR created a Probate Agreement Purchase Addendum (“PA-PA”) so that the RPA could continue to be used in probate transactions with the simple addition of a two-page Addendum. CAR then discontinued the old Probate Purchase Agreement form. However, after receiving commentary from some probate commissioners, CAR has significantly modified the PA-PA as follows:
- The option that Court Confirmation is Undetermined (¶3B) has been reformatted for easier reading;
- Paragraph 4 now makes it clear that escrow shall close within 10 Days or any other agreed-upon time frame from receipt of a Court Order confirming the sale, and Seller shall not be obligated to sign escrow instructions or incur escrow costs until after court confirmation;
- New ¶5 entitled Vesting specifies how Buyer intends to take title, a concept that is not in the RPA;
- Old ¶5 was a chart of provisions in the RPA that are not included in a Probate Sale; instead of that chart, new ¶6 (entitled Dispute Resolution) merely explains that the Liquidated Damages, Mediation and Arbitration provisions are stricken because the Probate Court has exclusive jurisdiction; and
- A new Real Estate Brokers box has been added below the Buyer and Seller signature lines to explain the basics of how a commission is to be paid in the event of an overbid by another broker’s buyer, and it explains that, as part of court confirmation of sale, the Probate Court will determine the commission amount. The Agents for the Buyer’s Brokerage and Seller’s Brokerage must then sign the Addendum below the Real Estate Brokers’ box.
PRACTICE TIPS FOR THE PA-PA:
- If you already have a pending transaction where the original version of the PA-PA 12/21 was used, it is not necessary to use the new form unless the Administrator or the Executor of the Estate insists upon it. For any new probate transactions, be certain to use the new PA-PA 2/22 version.
- The CAR Probate Advisory (“PA”) is an excellent tool to explain what Sellers and Agents must disclose in a probate sale and what disclosure forms are to be used. It should therefore be used whenever the PA-PA form is used.
- Unfortunately, even with the excellent additions that have been made to the PA-PA, most Agents will need additional information about how Probate sales are handled. CAR has two excellent Legal Q&As that can be accessed online and which should be used by Agents who are handling a probate listing or sale:
Commission Chart: https://www.car.org/riskmanagement/qa/probate-folder/probate-commission-chart
Probate Sales: https://www.car.org/riskmanagement/qa/probate-folder/probate-sales-real-property
ATTORNEY-CLIENT PRIVILEGED COMMUNICATION: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is 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. 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.
Copyright Broker Risk Management 2022 2/18/22