BROKER RISK MANAGEMENT
WEEKLY PRACTIVE TIP
During the week of September 8, 2025, in an unprecedented and unexpected move, the California Association of Realtors (“CAR”) released one new form and four revised forms. All were made because of changes that affected the industry such that these changes could not wait until the usual December Release.
NEW: FEDERAL REPORTING REQUIREMENT PURCHASE ADDENDUM (FRRPA)
Current Rules: On July 22, 2016, the Financial Crimes Enforcement Network (“FinCEN”), an agency of the United States Treasury Department, issued a Geographic Targeting Order (“GTO”) directing title insurers and their agents to collect and report information about residential real estate transactions in certain counties. The purpose of the GTO is to assist law enforcement and regulatory agencies to identify potential money laundering.
Paragraph 13E (Title and Vesting) of the RPA states “If Buyer is a legal entity and the Property purchase price is at least $300,000 and the purchase price is made without a bank loan or similar form of external financing, a Geographic Targeting Order (GTO) issued by the Financial Crimes Enforcement Network, U.S. Department of the Treasury, requires title companies to collect and report certain information about the Buyer, depending on where the Property is located. Buyer agrees to cooperate with the title company’s effort to comply with the GTO.”
B: NEW RULES: For any transactions which closes after December 1, 2025, even if the contract is entered into before that date, the FINCEN GTO now:
- Applies to all property being purchased with 1 to 4 residential units, vacant land for which the buyer intends to build 1-4 residential units, and shares in a coop housing corporation; and
- Covers legal entity buyers or trust buyers purchasing (a) “all cash” or (b) is financing the purchase through a bank or other institution that does not have a money laundering reporting obligation;
If the above factors apply, individual and entity sellers, as well as individual and beneficial interest trustees of trust sellers, must also comply with a request from escrow companies to provide the required information. (NOTE: After December 1, if the escrow company does not obtain ALL required information from BUYER and SELLER, the escrow cannot close.)
This form comes bundled with the CAR residential purchase agreement forms. After December 1, 2025, this form will be incorporated into all CAR residential purchase agreement forms.
PRACTICE TIP: If the property, buyer and financing meet the above new criteria, start using the FRRPA form as a part of your transaction if there is even a remote chance that the escrow may close after December 1, 2025.
REVISED TRANSACTION FORM:
MULTIPLE LISTING SERVICE ADDENDUM (MLSA) This form has been substantially revised and reorganized. The most significant changes are to Paragraphs 3 and 5: These paragraphs have been updated to reflect the latest NAR rules regarding public and private marketing of listings, the “Clear Cooperation Policy, and the various marketing options.
In addition, Page 3 is now entitled “Seller Instructions to Broker” and contains all seller instructions to broker in one place.
PRACTICE TIPS:
- It is important to read this new Addendum entirely for understanding and to explain to sellers all the listing and MLS marketing options and choices.
- If you have already provided the prior version of this form to your seller, you are not required to also provide this form. However, if there is new information that will be useful or desired by your seller (such as updates from NAR re marketing option information), or seller might wish to change their instructions to you regarding marketing of their property, it is recommended to review this form with your sellers, and, if sellers desire to make changes to their instructions to you, have seller can sign this new form.
REVISED PROPERTY MANAGEMENT FORMS
As a result of a California Appellate Court ruling, the following three forms have been revised to contain a “Jurisdictional and Procedural Warning” to not sign this form without seeking legal counsel from a qualified local landlord tenant eviction attorney because courts in some jurisdictions may not accept this form.
Notice to Quit Instructions (NTQ)
Notice to Cure (PCQ)
Notice Pay Rent or Quit (PRQ)
PRACTICE TIPS
- Do not use these forms unless you are a property manager and you have obtained your broker’s permission to engage in managing properties other than your own property.
- Unless you are a property manager, your agency obligations to a renter or rental property owner terminates when the tenant has signed the rental agreement/lease and tenant has moved into the rented property. Any service after that time to the tenant or rental property owner regarding the rental is property management and requires specific E&O insurance coverage as well as a civil general liability insurance policy.
- Do not assist either party in completing the move in inspection (form MII) or later the move out inspection (MOI) unless you and your broker have a property management agreement with the property owner and then only on the property owner’s side.
Attachments:
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 practice.