Q: We are receiving many offers where the Agency Confirmation portion of the Purchase Contract is incomplete. We understand if names are missing, we need to correct that, but what if the Other Broker just forgot to include the license number information? Do we really have to do an Addendum? Can’t we just fill in the missing information?
A: YES! Any and all mistakes in the Agency Confirmation portion of the Purchase Contract need to be correct and, NO, you cannot “just fill in the information.” Altering any portion of the Purchase Contract above the Parties’ signatures can be deemed fraudulent activity if all of the Parties do not approve of the change. Filling in the “missing” information would necessitate having all of the Parties approve the change; securing that approval takes as much time and effort as properly correcting the mistakes with an Addendum like the following form (or use the PRDS® Agency Confirmation Addendum, Form ACA 2/19).
There is no question that the recent legislative changes to Agency Confirmation, which went into effect January 1, 2019, were not welcome additions and it takes more effort to carefully review Offers to make certain that all of the required information is correctly completed. However, keep in mind that Agency Confirmation is a statutory requirement which the Legislature felt as being important; and we cannot choose to ignore or change it. The law now requires that ALL of the information in the Agency Confirmation portion of the Purchase Agreement must be in that Purchase Agreement.
PRACTICE TIPS
1. As a Buyer’s Agent: Find out all of the information about the Seller’s Brokerage Firm and the Seller’s Agent, including all license numbers, before preparing an Offer.
2. As a Seller’s Agent: Carefully review all portions of every Offer before presenting the Offer to the Seller to make sure that you understand all of the terms in the Purchase Agreement, not just the price and closing date. If the Agency Confirmation is the wrong version, has not been fully completed, or has been completed inaccurately, do not correct the changes in the Offer.
3. To correct any mistakes in the Agency Confirmation, use an Addendum specifically designed to correct those changes such as the one that follows this Tip entitled “Agency Confirmation Addendum.” (NOTE: The current version of the C.A.R. Agency Confirmation Form AC 12/18 attempts to do that but the signature lines are merely to acknowledge receipt of the form and not to agree to change the Purchase Contract).
4. REMINDER: If any one box is checked “dual agency,” then all of the other boxes must match it.
This Weekly Practice Tip is an attorney-client privileged document 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.
ADDENDUM FORM FOLLOWS:
Addendum _____
AGENCY CONFIRMATION ADDENDUM
THE FOLLOWING TERMS AND CONDITIONS ARE INCORPORATED INTO AND ARE MADE A PART OF THAT REAL ESTATE PURCHASE AGREEMENT DATED ___________________ BY AND BETWEEN ______________________________________________________________(“BUYER”) AND ______________________________________________________ (“SELLER”)
REGARDING THE REAL PROPERTY KNOWN AS: ________________________________________________________________.
Buyer and Seller understand, acknowledge and agree that the following Agency Confirmation provision is incorporated into the above-referenced Purchase Agreement to reflect that the actual Agency Relationship(s) in this transaction is/are as follows:
AGENCY CONFIRMATION:
Seller’s Brokerage Firm: ___________________________License No.___________
is the broker of (check one): □ the seller; or □ both the buyer and seller (dual agent)
Seller’s Agent______________________________________License No.___________
is (check one): □ the Seller’s Agent (salesperson or broker associate); or □ both the Buyer and Seller (dual agent)
Buyer’s Brokerage ________________________________ License No.___________
is the broker of (check one): □ the buyer; or □ both the buyer and seller (dual agent)
Seller’s Agent _____________________________________License No.___________
is (check one): □ the Buyer’s Agent (salesperson or broker associate); or □ both the Buyer and Seller (dual agent)
All other terms and conditions of the Purchase Agreement shall remain in full force and effect.
The undersigned Parties agree that this one-page Addendum is made part of the above-referenced Real Estate Purchase Agreement and, by signing this Addendum, Buyer and Seller acknowledge receipt of a copy of this Addendum.
Date: ________________ Seller: ________________________________________
Date: _________________ Seller: _______________________________________
Date: _________________ Buyer: _______________________________________
Date: _________________ Buyer: _______________________________________