This week CAR is introducing two new forms and six revised forms for use in residential listings and sales. A subsequent Weekly Practice Tip will discuss the revised rental property forms.
NEW FORMS:
- SQUARE FOOT AND LOT SIZE DISCLOSURE AND ADVISORY (SFLS)
This new form serves two important functions: it is a Disclosure to the Buyer that various size measurements may exist for the structure and/or the lot, and the known sizes are inserted into a chart by the person who prepares this form. It is also an Advisory that there is no accepted method of calculating square footage, that discrepancies in sizes may exist depending upon the source of the measurement, that Brokers and Agents have not and will not verify the accuracy of the disclosed sizes, and that Buyers should retain their own experts to determine the relevant sizes.
The San Francisco AOR and PRDS have their own comparable forms and Agents in those geographical areas should continue to use those existing forms. Broker Risk Management has had its own version of this form for several years. Unlike these other forms, the new CAR form does not specify who is completing the chart. Although Agents can choose to use the new CAR SFLS, the Broker Risk Management version is preferred.
USAGE: California case law requires that Agents disclose known size discrepancies and that they must make it clear whether or not any size information has been verified. Because of the frequency and cost of claims and lawsuits regarding square footage and lot size measurements, we strongly recommend that this type of form be used in connection with the sale of every property, even if only one measurement is known. For details:
See Weekly Practice Tip entitled “Square Footage and Lot Size Advisory and Disclosure” (02/17/17)
- PROPERTY VISIT AND OPEN HOUSE ADVISORY (PVOH)
This new form is an Advisory and was designed to be provided to anyone visiting property that is for sale or rent. It advises the visitor that they may be recorded by video or audio equipment, that there are various safety risks and that the visitor is responsible for accompanying minors.
USAGE: There is no indication on the form whether Sellers’ Agents or Buyers’ Agents should provide the form because arguably it could be provided by either Agent. Although there is some good information in the form, it is not required and it is doubtful that the “assumption of the risk” provision will be upheld to protect either Sellers or Agents if the Visitors are not appropriately warned of known risks at a specific property and they are injured.
REVISED FORMS:
None of the prior versions of the six revised forms can be used, except for possibly the revised SWPI, but the new version of that form is preferred.
- REAL ESTATE TRANSFER DISCLOSURE STATEMENT (TDS)
The statutory definition of what constitutes a fully-completed TDS now requires Sellers to complete Section I to
indicate whether or not the Seller is using any “substituted disclosures” to augment the Seller’s answers in the TDS. A new “No substituted disclosures” option has been added to Section I. If a Seller is obligated to complete and provide a TDS to the Buyer, in addition to fully answering the questions in Section II, the Seller must now check a box in Section I in order for the TDS to be considered “fully completed.” For further details:
See Weekly Practice Tip entitled “The Newly Revised Section I of the TDS.” (05/01/2020)
- DISCLOSURE INFORMATION ADVISORY (DIA)
There are three changes to this form. First, it now explains that a fully-completed TDS requires the Seller to check one of the three boxes in Section I of the TDS. Second, the information about Question II-C16 regarding new construction built by a “Builder” was moved and clarified. Finally, the form now points out that the SPQ contains questions which Sellers are required by law to answer. This form is an excellent risk management tool; Listing Agents should give this form to all Sellers at the same time the disclosure forms are provided.
- REPRESENTATIVE CAPACITY SIGNATURE DISCLOSURE -BUYER (RCSD-B)
The most significant addition is an option to use the form when there is an assignment from the original Buyer (Assignor) to an Assignee; the Acknowledgement of Receipt on the first page notes that it is to be acknowledged by the “Other Party” – the Seller.
- RESIDENTIAL LISTING AGREEMENT-EXCLUSIVE (RLA)
New sections regarding the NAR Clear Cooperation Rule and Public Marketing have been added. The information regarding the MLS was reorganized and expanded in the hopes of convincing MLSs that there is no need for a separate form to exclude the listing from the MLS (such as the SELM). New language was added to clarify that the Broker is required to timely submit all offers to the Seller. This form now includes a recommendation that the Seller should obtain HOA documents in advance, if applicable. Language has also been added to clarify the Listing Broker’s permitted use of a Keysafe/Lockbox.
- SELLER INSTRUCTION TO EXCLUDE LISTING FROM MLS (SELM)
Language regarding the NAR Clear Cooperation rule (that has been adopted by many MLSs) was added with a checkbox for use with MLSs that have not adopted the rule. Language regarding Days on Market was removed.
- SEPTIC INSPECTION, WELL INSPECTION, PROPERTY MONUMENT AND ALLOCATION OF COST ADDENDUM (SWPI)
A section to handle Propane Tank issues was added including a checkbox for Buyer to reimburse Seller for remaining gas in the tank. There is also a new option to locate and access the septic tank only.
WEEKLY PRACTICE TIP: 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 2020 06/26/20