BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
The following are questions and answers from Broker Risk Management’s (“BRM”) webinar held on June 9, 2025, regarding the California Association of Realtors’ June release of new and revised forms.
QUESTION NO. 1: In reviewing the updated Residential Purchase Agreement (“RPA”), there is no place for the seller to request the buyer broker representation agreement, and no affirmative representation from the buyer that the amount requested by buyer in the RPA is not greater than the amount buyer is obligated to pay their agent in that agreement. As the listing agent, how do we verify that the buyer’s broker has an effective agreement requiring the seller to pay the amount requested in the RPA?
ANSWER: BRM recommends that listing agents advise the sellers of this issue and, if instructed by seller, issue a counteroffer to the buyer requesting that verification. Attached to this tip are (1) a copy of BRM’s prior tip on this issue, and (2) BRM’s advisory from listing agents to sellers regarding verifying the amount the buyer has agreed to pay to their agent. Remember that it is up to seller to want to make that request.
QUESTION NO. 2: When is the fire hazard disclosure statement required?
ANSWER: You are referring to the CAR Fire Hardening and Defensible Space form (“FHDS”) which, as specified in paragraph 1 of that form, is only required if the following conditions are met: (1) the property is one to four residential units; (2) seller is required to provide buyer with a TDS; and (3) the property is in a high or very high fire hazard severity zone (as indicated in an NHD report). Note that paragraph 2 of the FHDS only required to be completed by seller if, in addition to the above criteria, the improvements on the property were constructed prior to 2010.
QUESTION NO. 3: I am a buyer’s agent with a buyer representation agreement. I have a co-buyer’s agent in my brokerage. The co-buyer agent departed the brokerage and will no longer be handling this transaction. What form do I use?
ANSWER: Prepare an amendment to the BRBC, removing that agent from the transaction. For this purpose, you can use either the Modification of Terms–Buyer Representation Agreement (MT-BR) or the basic Amendment of Existing Agreement form (AEA).
QUESTION NO. 4: When using CAR’s referral agreement, how do we confirm that the referral fee was disclosed to the buyer and seller?
ANSWER: Unfortunately, the newly revised CAR’s referral fee agreement (RFA 6/25) fails to address this issue. BRM has prepared its own referral agreement containing a signature line and acknowledgement by the buyer and/or the seller. The agents only need to obtain the signature of the principal that the referral fee affects. For example, if the listing agent is paying the referral fee, only the seller needs to acknowledge the fee. In that instance, the buyer would not need to review and acknowledge the referral fee. Contact your broker or manager to obtain a copy of this BRM form.
QUESTION NO. 5: Can a buyer’s agent have a buyer representation agreement signed after the execution of the purchase agreement?
ANSWER: No. Effective as of January 1, 2025, California law specifically requires that a written buyer representation agreement be signed between the agent and their buyer before the execution of a “a buyer’s offer to purchase real property.” This law applies to all types of property. Failure to comply with this, and all other requirements of this new California law, is a license violation and renders the buyer representation agreement void and unenforceable, thus voiding the buyer agent’s right to earn a commission.
QUESTION NO. 6: On the Receipt for Repairs (RFR), is a link considered the same as a .pdf attachment?
ANSWER: No. If a buyer rejects a link or indicates that the buyer cannot open the link, it is not considered properly delivered. However, a .pdf attached to an email would be considered properly delivered, so long as it can be opened.
QUESTION NO. 7: I am a listing agent. I regularly communicate with tenants and deliver tenant notices. I also coordinate showings with tenants. What are the risks?
ANSWER: It is recommended that all communications with a tenant go through the seller/owner and that you refrain from communicating with the tenant, particularly in areas with tenant protection laws. By communicating directly with the tenant, even if it is scheduling showings, there could be an argument that you interfered with the tenant’s lease. It is recommended that agents refrain from preparing or delivering notices to tenants on behalf of the seller. By doing so, agents are categorized as owner’s representatives for purposes of tenant protection acts and subject agents to claims by tenants of violation of such acts.
QUESTION NO. 8: Is the SPBB still an operative form?
ANSWER: No. The SPBB has been removed from CAR’s forms library.
QUESTION NO. 9: Can I provide a Notice to Quit or a Notice to Vacate as a courtesy to the owners without providing directions? What is the liability if I do so?
ANSWER: Technically, CAR will allow you to provide those forms to a client with whom you are working. However, there is significant liability in providing those forms if your name or your brokerage’s name are on the bottom. While providing those forms is discouraged, if you do so, you should (1) discuss it with your manager to obtain approval from your brokerage, (2) remove your name and the brokerage’s name from the bottom of the form, and (3) advise your client to consult with a qualified local landlord-attorney with any questions.
QUESTION NO. 10: When adding a new buyer to a contract using CAR Form AOAA, is it recommended that the new buyer sign the RPA, disclosures, etc.?
ANSWER: Yes. When a new buyer is added to a transaction, that buyer should acknowledge receipt of the RPA and all disclosures. That buyer should also be advised that that buyer is stepping into the shoes of the existing buyer as the contract and escrow exist at that time. For example, if contingencies have already been removed, just by adding a new buyer, the contingency period is not being reopened.
QUESTION NO. 11: What form do I use if I submitted a counteroffer and it was not accepted, but the listing agent advised that I could send another counter?
ANSWER: Use a buyer counteroffer #2.
Attachments:
1) 250228 Sellers Confirming Buyer’s Agent’s Entitlement to Compensation
2) Advisory Regarding Verifying the Buyer’s Representation 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.