BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
NEW C.A.R. HOME EQUITY SALES FORMS
AVAILABLE APRIL 14, 2008
Last week’s Weekly Practice Tip provided interim forms and procedures for representing an equity buyer in a Home Equity Sale Act (HESA) transaction. It was anticipated that these interim forms and procedures would be necessary because CAR was not planning to release its new and revised forms for HESA sales until the releasing its other new and revised forms on April 28, 2008.
CAR has just announced that, based on demand from agents in the field, its forms for use when representing equity buyers on HESA transactions will be released on MONDAY, APRIL 14 through WinForms. (Hard copy forms will be available on April 28 with the rest of the CAR standard forms release.)
So, commencing Monday, April 14, 2008:
1. Access WinForms and download the following forms:
A. The revised Notice of Default Purchase Agreement (NODPA).
B. The Home Equity Notice of Cancellation (HENC) which prints with the
NODPA. (This form is unchanged.)
C. The new Declaration and Proof of Real Estate License. (DPL)
All three forms must be used when representing an equity buyer on a HESA sale.
2. Do NOT use the old NODPA, nor do you need to use the old Home Equity Agency Addendum (HEAA) which has been eliminated.
3. Do not use the “Buyer Agent Statement” attached to last week’s Weekly Practice Tip. The new DPL form serves the same purpose, and will be the statewide standard.
4. The CAR form DPL asks for written proof of your real estate license, as well as your broker’s real estate license if you hold a Salesperson’s license. This written proof can be:
A. A copy of your (and, if applicable, your broker’s) actual license; or,
B. A copy of the printout from the DRE website of your (and, if applicable, your broker’s) license information.
ASK YOUR BROKER FOR A COPY OF PROOF OF HIS/HER BROKER LICENSE TO ATTACH TO THE DPL FORM ALONG WITH A COPY OF PROOF OF YOUR OWN PERSONAL LICENSE.
PRACTICE TIPS:
1. Ask your escrow officer to keep you updated as to whether a Notice of Default has been recorded against the property being sold. If a Notice of Default is recorded on the property during escrow, immediately consult with your manager to determine the best approach to give the seller the notice of the right to cancel.
2. If you are representing a buyer who purports to be an owner-occupant buyer, then the HESA does not apply, and you may reasonably rely on your buyer’s representation. In that case, you do not have to use the NODPA or the HENC, but can just use a regular purchase agreement. However, be aware of “red flags” that may arise which cause you to doubt your buyer’s true intention to occupy, and discuss with your manager.
3. Until a seller’s five-day right to cancel has expired, neither the investor buyer nor buyer agent should: (a) pay the seller any consideration; (b) induce a seller to sign any document transferring any interest in the property, nor accept such a document; (c) record any instrument signed by seller; or (d) transfer or encumber any interest in the property to a third party.
4. Brokers in brokerage offices should make copies of their broker’s license, or print-outs of their license information from the DRE website, available to their sales agents to be attached to the new DPL form for HESA transactions.
For further information,n read the CAR Legal Memorandum entitled: “Notice of Default and Investor-Buyer Transactions: Home Equity Sales Contracts” at: http://www.car.org/index.php?id=MTUyMg==
While these changes have been confusing, it is good that CAR has moved fast to bring the required forms to its members, as well as an update to the above referenced Legal Memorandum, in a very rapid manner to meet the needs of agents in the field.
This Weekly Practice Tip is attorney-client privileged and 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 2008 Broker Risk Management
