BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
QUESTIONS AND ANSWERS FROM CAR NEW FORMS RELEASE WEBINAR
On June 1, 2026, Broker Risk Management (“BRM”) held a webinar regarding the California Association of Realtors’ new forms release. That webinar will be replayed on June 8, 2026. The following are questions and answers from that webinar.
QUESTION NO. 1: If a Notice to Perform has been delivered to a buyer regarding the buyer’s failure to remove contingencies, and the buyer does not remove the contingencies, can a seller issue a demand to close escrow? Can the seller cancel? Can the seller keep the buyer’s deposit?
ANSWER: If a Notice to Perform has been issued to the buyer for the failure to remove contingencies, and the buyer fails to remove those contingencies within the time frame set forth in the contract, the seller can issue a Cancellation of Contract. However, without mutual agreement, the contract should not be considered canceled. Therefore, the seller needs to be cautious in accepting another offer. If the close of escrow date has passed and the buyer has not closed the escrow, the seller can issue a demand to close escrow followed by a cancellation. The same risk would apply to the seller as indicated herein, if a mutual cancellation has not been signed. If the contingencies remain in place, it is doubtful that the seller can recover the deposit.
BRM issued a tip in March 2026 regarding the risks to a seller of reselling the property without having a mutual cancellation. If your seller has cancelled the purchase agreement without the mutual written agreement of the buyer to the (1) cancellation of the purchase agreement (2) the escrow and (3) the disposition of the deposit in escrow and now wishes to immediately put the property back on the market, before proceeding, review the prior tip and contact your manager for advice.
QUESTION NO. 2: Is a buyer obligated to submit a loan application immediately upon entering escrow?
ANSWER: Depending on the terms of the contract, the buyer will be required to purchase the property by the close of escrow. If the buyer does not timely submit a loan application, the buyer may not be able to comply with the terms of the contract. However, CAR’s RPA does not specifically require the submission of a loan application within a particular time frame. However, please note that the RPA gives the seller or seller’s agent the right to contact buyer’s lender to determine the status of buyer’s loan application.
QUESTION NO. 3: Does a professional trustee managing a property have to complete an Exempt Seller Disclosure?
ANSWER: The RPA, Para. 11A3)(ii) requires all sellers to complete either an Exempt Seller Disclosure (ESD) or SPQ. The ESD contains information that a seller who is exempt from completing a Transfer Disclosure Statement is required to provide to a buyer. A professional trustee who is managing the property and has not occupied it in the past year would fall into that category.
QUESTION NO. 4: Are sellers who are exempt from completing a Transfer Disclosure Statement exempt from installing carbon monoxide detectors?
ANSWER: No. Sellers are required to install carbon monoxide detectors or disclose that the property does not have the detectors. See zipForms form WHSD.
QUESTION NO. 5: When there is a new buyer on a contract using the AOAA, do you recommend that a new buyer sign and initial all prior documents?
ANSWER: Yes. All prior contract or disclosure documents should be provided to any new buyer (assignee) by the first buyer or, if a box is checked in the AOAA, the seller. The file should reflect that the documents were provided to that assignee. It is recommended that the assignee acknowledge receipt of those documents.
QUESTION NO. 6: If a buyer does a partial assignment to another buyer (for example, when the buyer is adding another buyer to the contract), but uses the same broker, does a new assignee need to sign a BRBC?
ANSWER: Yes. The required BRBC is not tied to the broker but is tied to the buyer. If there is a new buyer, a buyer representation agreement must be executed by every buyer including a new buyer.
QUESTION NO. 7: If a tenant is in a property and the broker wishes to show it, whether to individuals or a tour, how should notice be provided?
ANSWER: Agents should never provide notice to the tenants for any reason. All notices must be provided by the seller. This will limit liability for the agents as tenants may assert claims for interference with their lease or tenants’ rights.
QUESTION NO. 8: If a buyer wants to purchase a multi-family property with tenants in it, do you recommend that the buyer be referred to an attorney for consultation?
ANSWER: Yes. If a buyer is purchasing any property with tenants, there are significant state and local tenant rights laws in the State of California of which the buyer should be aware. An attorney can also ensure that all of the leases are properly reviewed and that the buyer is adequately protected. An attorney can also arrange for assignments of the leases to the new buyer.
QUESTION NO. 9: Is the FinCen form still required?
ANSWER: The CAR FinCen form (FRR-PA) is not currently required as a federal judge stayed the enforcement of the new FinCen reporting rules. That ruling is on appeal. Until the Court rules otherwise, the FinCen form is not required.
QUESTION NO. 10: For the new agent in the AOAA, how much does agent #1 receive and how much does agent #2 receive?
ANSWER: Agent #1 receives the amount negotiated with the buyer and/or seller in the BRBC and/or RPA, depending on who is paying the buyer’s agent. Buyer #2’s agent is paid pursuant to negotiations between buyer #1 and buyer #2. See AOAA ¶4 for details.
QUESTION NO. 11: Where can I find the CAR Q&A regarding liquidated damages and arbitrations?
ANSWER: We have attached the links to those forms for your convenience. BRM recommends that these forms be placed in buyers representation and listing packages to educate clients before contracts are executed.
CAR Q&A All About Liquidated Damages: https://www.car.org/-/media/CAR/Documents/Transaction-Center/PDF/QUICK-GUIDES/Quick-Guide–Liquidated-Damages-REVISED-032123.pdf
CAR Q&A Arbitrations: https://www.car.org/riskmanagement/qa/arbitration-folder/arbitrationconsumer