BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
The following is a discussion of the CAR Revised Rental Forms.
(There is only one new CAR rental form, the Rental Property Owner Disclosure (RPOD), which will be addressed in a separate tip.
LL – Lease Listing Agreement
- The word “Owner” has been replaced throughout by the phrase “Rental Property Owner”.
- The owner disclosure paragraph has been replaced by the RPO’s agreement to complete a Rental Property Owner Disclosure (form RPOD, which will be addressed in a separate tip).
- Optional paragraph added to provide broker compensation if the tenant acquires the property during the term of the tenancy (¶3E).
- ¶4A makes it clear that tenant’s initial payments are to go to the RPO, if box is checked, to broker.
(That box should never be checked except by a property manager. See PMA form below)
- Entity signatures allowed directly on form
PMA – Property Management Agreement
(NOTE: This form should only be used by experienced property managers and, if not with a property management brokerage, only with the express permission of your broker or manager.)
- Similar changes as with form LL.
- Allows termination by either party for cause at any time (¶1B(2)).
- Certain ongoing expenses to be paid by RPO unless broker box checked (¶3G)
- Expanded indemnification clause (¶4C).
- If RPO fails to obtain liability insurance, property manager may do so and charge RPO (¶4F). Optional compensation clauses include pre-litigation fee, onboarding fee, cancellation fee, and file closing fee (¶7).
- Each party to pay their own attorney fees (¶11).
- Optional right of property manager to modify PMA on 30-day’s notice (¶14).
RLMM – Rental Lease or Month to Month Rental Agreement
- Defines Rental Property Owner, Authorized Broker or Agent, or Property Manager collectively as “Housing Provider,” because any of them could sign the agreement. The term “landlord” being deemed to have a negative connotation.
- Added language about the limits on accepting multiple rental payments in advance (¶5).
- Added a warning to tenant to remove photos and other valuables that the tenant would not want to be seen in photos or videos of the premises posted online for marketing purposes (¶20A).
- The RLMM comes from zipForms bundled with the following required: Bed Bug Disclosure; Tenant Flood Hazard Disclosure; Rent Cap and Just Cause Addendum; Fair Housing and Discrimination Advisory and Information on Dampness; and Mold for Renters in California.
MII and MO forms – Existing form MIMO has been replaced with MII for move-in and MO for move-out.
- Each item listed can be marked as NEW, OTHER or N/A (item not included). Items are deemed to be in satisfactory condition unless noted in this form.
- Each fillable field will be a text overflow field and allow for the attachment of photos
PMOI – Pre-Moveout Inspection Statement
- Reformatted to be consistent with new MII and MO.
- Language added for return of security deposit and statement regarding use of security deposit to be made electronically.
NRI – Notice of Right to Inspection Prior to Termination of Tenancy
- NOTE: Prior to moving out, the Civil Code requires that a tenant be given a notice that the tenant is entitled to a pre-move out inspection. This form meets that requirement.
- Modifies instruction that this notice should be given to Tenant within a “reasonable time” after either Housing Provider or Tenant has given the other written notice of intent to terminate the tenancy, or before a lease term ends.
- Language added for return of security deposit and statement regarding use of security deposit to be made electronically.
LRA – Application to Lease or Rent/ Screening Fee
- Defines Rental Property Owner, Authorized Broker or Agent, or Property Manager collectively as “Housing Provider.”
- Screening fee section II includes information about the property address, rental amount and proposed move-in date for the premises being sought that was previously in the tenant information section I.
- Screening fee includes an updated maximum screening fee amount (currently $52.46, but increases with Cost-of-Living increases, from 2020 from a DRE publication).
PRACTICE TIPS:
- Agents who are not working for a property management brokerage need to consult with their broker or manager regarding the scope of permitted activities before undertaking any leasing activities.
- Unless the agent is a property manager, agents are discouraged from receiving checks or other forms of payment from tenants in payment of their commission. The landlord should pay the commission check to the broker and the broker will compensate the agent.
- Broker and agent clients of Broker Risk Management are encouraged to watch BRM’s webinar regarding leasing versus property management to ensure they do not cross the line into property management when they are not trained in that area.
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.