BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
(Forms for Lease, Rental, and Property Management are in a Separate Tip)
NEW FORMS
(CR Contingency Removal Discontinued Replaced by CR-B and CR-S)
CR-B Buyer’s Contingency Removal: Buyer portion of the previous contingency removal form (CR) has been separated into its own form. Paragraph 2C(3) now makes it explicit that insurability of property is not its own contingency, but part of the overall investigation contingency and is removed when the investigation contingency is removed. Options are added in 2C(4) to allow a buyer to exclude fire or flood insurance or both from the removal of the rest of the investigation contingency.
CR-S Seller’s Contingency Removal: Seller’s portion of the previous contingency removal form (CR) has been separated into its own form and identifies the seller’s contingencies being removed including SPRP and “Other.”
RU-PA Residential Units Purchase Addendum: For use with a CPA or VLPA, this form addresses the residential aspects of a mixed-use property that is primarily commercial, but with ancillary residential unit or units. It also discusses disclosures if the property is residential 1-4 units. (NOTE: If the primary purpose of the transaction is residential with an ancillary commercial use, then form MU-PA, Mixed-Use Purchase Addendum, with an RPA or RIPA.)
REVISED FORMS
ABA Additional Broker Acknowledgement and Addendum: Now, this form is also identified as an Addendum. Paragraphs 1 and 2 have compensation breakdowns, duties split and other agreed terms in an addendum. The default is equal duties. Paragraph 4 was added to include the names of agents working for both brokers.
ABSPA Already-Built Subdivision Purchase Agreement and Joint Escrow Instruction: Paragraphs 34, 35, and 36 were modified to identify that SB 800 statutory warranties apply to all sales.
AOAA Assignment of Agreement Amendment: This form was changed from an Addendum to an Amendment. It adds Paragraph 1C to make it clear that there are three assignment options, including:
1A: Partial Assignment: No buyer is deleted and buyer(s) added
1B: Total Assignment: All buyers are deleted and new buyer(s) added
1C: Other Assignment: At least one buyer remains on the contract and one or more buyer(s) leave and new buyer(s) are added.
BCO Buyer Counter Offer;
SCO Seller Counter Offer;
SMCO Seller Multiple Counter Offer:
Includes an example in 1C explaining how an appraisal gap in the original offer is affected by a change in price in a counteroffer.
BHAA Buyer Homeowner Association Advisory: Buyers are advised to review the Preliminary Title Report. Additional information on CC&Rs, Bylaws, Rules, Regulations, minutes, and financial information was added. Additional language was added to Paragraph 10 explaining how HOA litigation may impact the willingness of lenders to make a loan on the property.
CC Cancellation of Contract, Disposition of Deposit, and Cancellation of Escrow: Added “Advisory and Instruction” language explaining how to fill out the form if one party is cancelling independently or proposing a mutual cancellation. Paragraph 2 on page 2 addresses disposition of the deposit, cancellation of escrow, and release language.
CCSPA Condominium Conversion Subdivision Purchase Agreement and Joint Escrow Instructions: Paragraph 1 language was changed to identify a buyer’s right to receive money back, if property the does not close, through no fault of the buyer.
CLA Commercial Residential Income and Vacant Land Listing Agreement: Paragraph 4 conformed to the Residential Listing Agreement, including the addition of smart home features. Paragraph 10B was added to address the presentation of offers, defaulting to offers to be presented as they are submitted and giving the seller the option of holding offers to a specific date. Contact information for sellers was added to the signature paragraph.
COL Cancellation of Listing: Language added to clarify that any of the numbered paragraphs may be checked, but both options within Paragraph 1 may apply. Paragraph 2 was modified to avoid confusion over the amount to be paid in the event property is listed with another broker.
DIA Disclosure Information Advisory: The SPQ paragraph contains a reminder that the seller shall provide current and past reports and other relevant documents.
MH-PA Manufactured or Mobile Home Purchase Addendum: Paragraph 8 was modified to clarify that either buyer or seller may cancel, if the buyer is not approved by the mobile home park. Buyers should not remove this contingency until park management approves.
NBP Notice to Buyer to Perform: Language was added to make it clear that if the Notice is given too early for some identified contingencies or contract actions, it is only invalid as to those contingencies or contract actions, but valid as to the others identified in that Notice.
NCPA New Construction Purchase Agreement: Paragraph 1 was modified to make it explicit that the seller must complete construction and provide a certificate of occupancy by the date set for close of escrow. Also, there is changed language to identify a buyer’s right to receive the deposit back, if the property does not close through no fault of the buyer, and the buyer has the right to cancel or elect to continue if the property does not close as scheduled. Paragraphs 36, 37, and 38 were modified to identify that SB 800 statutory warranties apply to all sales.
PA-PA Purchase Agreement Probate Addendum: Optional sentence was added to court confirmation in Paragraph 3 giving the buyer a cancellation right if no confirmation date is held within 60 days of acceptance. If the property is being sold under IAEA and either party wants to add Liquidated Damages, Mediation, and/or Arbitration, parties are advised to check with qualified California real estate counsel.
RCSD-B Representative Capacity Signature Disclosure (for Buyer Representatives) Separate signature boxes were removed from the buyer broker agreements and assignment agreements. The word, landlord was changed to housing provider.
RIPA Rental Income Property Purchase Agreement: Language was added to Paragraphs 3M(1) and (2) to make it explicit that vacant units and seller-occupied units are to be delivered vacant, and that form TOPA should be attached, if there are tenant-occupied units. Clarifying language regarding the TOPA was added to Paragraph 7. Paragraph 14 now addresses prepaid, but unearned rent.
RLA Residential Listing Agreement – Exclusive;
RLAN Residential Listing Agreement – Open;
RLASR Residential Listing Agreement Seller Reserved:
Paragraph 4C was added to address inclusion/exclusion of smart home features. Agents should obtain seller and buyer agreements before the contract acceptance. Paragraph 10B was added to address the presentation of offers, defaulting in Paragraph 10B(1) to offers to be presented as they are submitted, and giving the seller the option in Paragraph 10B(2) of holding offers to a specific date. Contact information for sellers was added to the signature paragraph.
SBSA Statewide Buyer and Seller Advisory: Paragraph A15 was added to explain preliminary reports and the importance of reading documents referred to, in them, such as HOA documents. Paragraph D10 was added to make the parties aware that some jurisdictions have enacted, or in the future may enact, laws to prohibit natural gas appliances in new construction, or bans on sale or replacement of fuel sources other than electricity. Paragraph F3 was added to clarify the right to have discriminatory covenants removed from the title. Paragraph F8 now discusses “Net Energy Metering” and addresses situations where fees or credits to solar power system owners may be reduced or otherwise changed or be subject to change on change of ownership.
SOLAR Solar Advisory and Questionnaire: Paragraph 6A(9) was added as a catch-all for any material fact that the seller needs to disclose about the solar power system such as defects and/or repairs.
SPBB Seller Payment for Buyer’s Broker: Added much-needed instructions to make it clear that the form is only needed if: (i) a buyer representation agreement has already been signed; (ii) the compensation offered through the MLS will not cover the entire payment the buyer would be responsible for paying the buyer’s broker, and (iii) the buyer is asking the seller to pay buyer’s broker all or a portion of the balance due buyer’s broker under the BRBC.
SPRP Seller’s Purchase of Replacement Property: Language added to optional Paragraph 1B to indicate that if the seller has already entered into a contract to acquire other property, then the continency for finding replacement property is eliminated, and the timeframes specified in Paragraphs 2A and 2B remain as specified in the Agreement. Paragraphs 4 and 5 were added to identify the buyer’s and seller’s respective rights to cancel.
TDS, SPQ, ESD: Added optional language for use if a property contains 2-4 units. This now states whether the TDS, SQP, or ESD forms apply to only a certain unit, and that additional TDS, SPQ, or ESD forms, as applicable, will be required for other units.
TEAM Team Agreement: Language was added to 9C to identify that compensation rights between team members that apply after termination of the agreement occur after first deducting any payment made to or split with the broker.
TOPA Tenant Occupied Property Addendum: Paragraph 1B(3) was added to create an obligation of the seller to identify the names of all adult occupants on the property, whether or not paying rent. The default is that the property will be delivered with tenants in possession. However, Paragraph 1B(4) can be used if the buyer wants a particular unit or units vacant at COE. This can also be used with RIPA.
VLL Vacant Land Listing Agreement: Paragraph 10A specified the broker’s responsibilities and authority. Paragraph 10B was added to address the presentation of offers. The Default is for offers to be presented as they are submitted and gives the seller the option of holding offers to a specific date. Signature Paragraph was modified to conform to RLA, addressing entity owners, and contact information for sellers.
VLPA Vacant Land Purchase Agreement: Paragraph 3E(3) was modified to reflect that the property will either be for investment purposes or something else. Paragraph 3Q(2) added a parenthetical to clarify that the environmental survey indicated is for Phase I only. 3Q(3) was modified to make it explicit which party pays for government requirements, inspections, and reports.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is an attorney-client privileged communication 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 LLP. 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.