BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
On December 8, 2025, Broker Risk Management provided a webinar to its clients regarding the California Association of Realtors’ new and revised forms. The following are questions and answers from that webinar:
QUESTION NO. 1: Will this webinar be replayed or available?
ANSWER: The webinar will be replayed on December 15, 2025 at 1:30 p.m. Invitations were sent to all clients of BRM. After that showing, the webinar will be posted to BRM’s website and available to clients. The PowerPoint will also be posted.
QUESTION NO. 2: When will the forms be released by CAR?
ANSWER: December 16, 2025.
QUESTION NO. 3: With regard to the RAD form, we, as real estate agents, have always felt that referral fees are confidential and do not concern our clients. Why do we need to disclose those referrals now?
ANSWER: Common law, fiduciary obligations, and case law, prohibit fiduciaries from receiving “secret profits.” A referral fee without disclosure to a fiduciary’s principal could be considered a secret profit. Moreover, the genesis of the NAR antitrust litigation was a lack of transparency to, or understanding by, real estate principals of the payment of commissions between agents. Sellers claim that they did not understand nor were aware that buyers’ agents, who had an adversarial position to the sellers, were being paid by the sellers, nor the amount of those payments. Conversely, buyers have complained that they were not aware of the amounts that the buyers’ agents were being paid by the seller through the listing agent. Recently, consumer rights advocates and antitrust plaintiffs’ attorneys are now raising concerns about the non-disclosure of referral fees. Therefore, CAR as well as BRM recommend that referral fees, whether paid or received, be disclosed to the affected parties. For example, if a buyer’s agent is receiving or paying a referral fee, that referral fee should be disclosed to the buyer.
QUESTION NO. 4: When would be the best time to provide the RAD form to the clients? At the time the listing or buyer representation agreement is signed or after?
ANSWER: The RAD form should be signed as soon as practicable, preferably, at the time of signing the BRBC or listing agreement. Note that the RAD form can be used: (1) to identify how a Realtor® is different from other agents; (2) when an agent is receiving payment from more than on source; (3) when an agent has a present or potential interest in the property; and (4) when the agent is paying or receiving compensation for a referral.
QUESTION NO. 5: Does the RAD form apply to new construction properties?
ANSWER: Yes.
QUESTION NO. 6: Are you able to modify the RAD form if later in the transaction you represent the buyer?
ANSWER: Yes. The form can be modified to provide a disclosure to the buyer.
QUESTION NO. 7: If you are in escrow on a property and a buyer representation agreement expires, does it need to be renewed mid-close of escrow?
ANSWER: No, assuming the purchase agreement provides for payment of your commission. All CAR purchase agreements provide that buyer broker compensation is payable at the close of escrow, without reference to the status of the BRBC. Also, Paragraph 4D(1) of the BRBC provides that “Broker shall be entitled to compensation whether any escrow resulting from this Agreement closes after the representation period.”
QUESTION NO. 8: If rental properties are sold by the owner, are they required to complete the Transfer Disclosure Statement and/or Seller Property Questionnaire?
ANSWER: By California law, a Transfer Disclosure Statement is required to be completed by all sellers of all residential 1-4 unit properties, unless a specific exemption applies (e.g., the property is sold pursuant to a probate sale, the property is being sold by a lender after a foreclosure, etc.). The Seller Property Questionnaire (SPQ) is to be used if required by contract. Therefore, if the purchase agreement form being used requires the seller to provide an SPQ, it must be provided, including a rental property.
QUESTION NO. 9: Regarding the cancellation of agency by a buyer agent when the seller declines to pay the commission to the buyer and the buyer cannot pay the commission, what will stop the listing agent from representing the buyer for free and closing the deal with them?
ANSWER: That could occur. BRM does not recommend that a listing agent represent a buyer for zero compensation because there is potential liability for representing buyer in a real estate transaction. Therefore, to cover that potential liability, the agent should be compensated from either seller or buyer for representing the buyer. In addition, some errors and omissions insurance policies will not cover claims where the agent was not paid. Notwithstanding, before the listing agent agrees to represent such a buyer, the listing agent must receive the seller’s approval to become a dual agent. If seller agrees, the listing agent should: (1) have seller and buyer’s first broker sign a Cancellation of Agency Confirmation (CAC form) removing that broker and replacing buyer’s representation by the listing broker; (2) listing broker signs a BRBC with the buyer becoming a dual agent; (2) have both seller and buyer sign a new Confirmation of Agency (AC form).
QUESTION NO. 10: If an agent has represented the original seller when they bought the property and the agent has the historical documents from the sale, is the seller responsible for giving them to the buyer, even if they are exempt from the TDS and complete an exempt seller disclosure (“ESD”) form?
ANSWER: Yes. Even if a seller is exempt from completing a Transfer Disclosure Statement, all sellers must disclose to buyers all information materially affecting a property of which the seller is aware. Therefore, if the seller has historical documents from the seller’s purchase of the property, or otherwise received during their ownership, all such documents materially affecting the value or desirability of the property must be disclosed to a buyer. Similarly, brokers and their agents, whether representing a seller or buyer in a transaction, have a separate obligation to disclose to buyers all documents reasonably in their possession which could affect the value or desirability of the property being purchased.
QUESTION NO. 11: If I am representing a buyer and the Residential Purchase Agreement is assigned to another buyer, what happens to my commission?
ANSWER: You are encouraged to read the Assignment/Nomination section of the RPA (Paragraph 23) to fully understand the complexities of an assignment; and read and use the Assignment of Agreement Amendment (form AOAA) for the assignment by the buyer. Assuming that the BRBC and/or the Residential Purchase Agreement requires that a commission be paid to you, you will be paid. However, if the second buyer (the “assignee”) is represented by an agent, an issue arises if that assignee’s agent is expecting to be paid compensation at the close of escrow from a source other than their client even if they have a BRBC agreement with their client. The buyer agent’s portion of the commission will need to be negotiated between buyer, assignee and their respective agents as part of the assignment agreement.
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.