BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Broker Risk Management held a webinar on December 8, 2025, which was replayed on December 15, 2025, covering the new CAR forms release. The following are additional questions and answers from those webinars:
QUESTION NO. 1: I am the seller of the property and the listing agent. Can I refer the buyer to another agent and receive a referral fee?
ANSWER: Please note that you cannot represent a buyer while acting as the seller of the property. That creates an irreconcilable conflict of interest. The Department of Real Estate (DRE) has specifically advised BRM that such practices are absolutely prohibited. With regard to referring a buyer to another agent, legally there are no prohibitions so long as you do not provide any licensee service to that buyer on any property for which the buyer is working with the recipient agent. Please note that as a side note, representing yourself in the sale of the property creates unnecessary complications. For example, many errors & omissions insurance policies exclude coverage if an agent/seller is representing themself. It is recommended that you allow another agent in your office to represent you, and if you receive a referral fee from that agent, you should disclose it in writing to that buyer.
QUESTION NO. 2: Wholesaling proposes many risks which are not often reflected in the contracts. A lot of times, wholesalers make up their own contracts. How do you propose we handle this?
ANSWER: Please see the attached tip regarding the risks of working with wholesalers.
QUESTION NO. 3: Does the revised Seller Property Questionnaire (“SPQ”) require the disclosure of marijuana smell at the property?
ANSWER: Marijuana smell or a known prior usage of marijuana at a property should be disclosed on the SPQ. Question 18A of the SPQ asks if the seller is aware of “Any occupant of the Property smoking or vaping any substance on or in the Property, whether past or present.”
Also, be aware of a new law which goes into effect on January 1, 2026, making it the responsibility of sellers to disclose actual knowledge of any residue from smoking tobacco or nicotine products in residential real estate sales, or any history of occupants smoking tobacco or nicotine products on the property. This can now be disclosed in new question 18B of the SPQ.
QUESTION NO. 4: Is the RAD a required form? If so, when is it required to be provided?
ANSWER: The RAD is not a required form, but it is recommended. As expressed in our last tip, the law prohibits the receipt of secret profits. Therefore, it is recommended that agents disclose to their clients compensation they receive from all sources in the transaction, which includes the payment and receipt of referral fees. The RAD form can also be used to make the mandatory disclosure if the agent has an interest in the property. It is recommended that the RAD form be provided to the client as soon as practicable.
QUESTION NO. 5: Do you recommend that we include the DIA in the disclosure package?
ANSWER: Yes. BRM recommends that listing agents provide sellers with the DIA prior to sellers completing their disclosures.
QUESTION NO. 6: Can a buyer or seller refuse to sign the RAD?
ANSWER: Yes, a buyer or seller can refuse to sign any discretionary form. If that occurs with the RAD or any discretionary form, ensure that your file reflects that you have provided it to that party and document that they are refusing to sign it.
QUESTION NO. 7: Can a buyer or seller prevent a referral fee from being paid?
ANSWER: If a buyer or seller strenuously objects to the payment of a referral fee and the issue cannot be resolved to their satisfaction, discuss the situation with your manager or broker, but generally a referral fee should not be paid in that circumstance.
QUESTION NO. 8: Is the Seller Property Questionnaire a required form?
ANSWER: The SPQ is not required by law, but it is required in most CAR contracts for all sellers who are required to completed a TDS. Therefore, it can be eliminated by contract, but listing agents should make sellers aware that, if the SPQ is eliminated, most sellers would be required to disclose if there are “Yes” answers to the SPQ questions in Section 6 ”Statutorily or Contractually Required or Related.” (Note that those same questions appear in the Exempt Seller Disclosure (ESD)). BRM recommends that sellers be encouraged to complete the SPQ to protect the seller and agents.
QUESTION NO. 9: I have a current listing but it is not in escrow. Should we have the seller complete the new versions of the forms?
ANSWER: Yes, the seller should complete the most updated version of CAR’s forms.
Attachment: 250321 Risks of Working With Wholesalers
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.