December 10th, 2018 at 2:09 pm

C.A.R. released today its biannual standard forms update. Here are some highlights, including revisions made to comply with new 2019 laws:

  • Agency Disclosure Statement (AD): The AD has been revised to reflect 3 major changes in the law that will take effect on January 1, 2019.
    1. Delivery of Third AD No Longer Required: A buyer’s agent presenting a buyer’s offer will no longer be required to give an AD form to the seller to sign. A listing agent must still provide an agency disclosure statement to the seller before entering into a listing agreement (AD1), and a buyer’s agent must still provide an agency disclosure statement to the buyer before writing an offer to purchase (AD2). However, under existing law, a third agency disclosure statement is required between the buyer’s agent and the seller (AD3), which has made no sense to practitioners. The law requiring that third agency disclosure statement has been repealed effective January 1, 2019.
    2. Selling Agent is Now Buyer’s Agent: All references in the AD form (as well as in the law) to the antiquated and confusing term, “selling agent,” for someone representing a buyer, have been changed to “buyer’s agent.”
    3. Confidentiality Defined: The AD and other affected forms now clarify that, when representing a seller and buyer, a dual agent without express permission cannot divulge one party’s confidential information to the other party. Such confidential information includes any facts relating to a client’s financial position, motivations, bargaining position, or other personal information that may impact price.
  • Residential Purchase Agreement (RPA): Two significant revisions have been made to the RPA.
    1. Agency Confirmation Includes Salesperson: The Agency Confirmation in paragraph 2B of the RPA has been expanded to include not only the seller’s brokerage and buyer’s brokerage, but also the individual salespersons (or broker associates) representing the seller and buyer. Checkboxes that have been added for the salespersons are likely to cause confusion. However, whomever our company represents should match exactly with whomever our salesperson represents. If our company represents the seller or buyer only, then any of our salespersons involved in the transaction also represents the seller or buyer only. Also, if our company is a dual agent, then any of our salespersons involved in the transaction is also a dual agent.
    2. Written Confirmation for Presentation of Offer: The other major change is a new “Presentation of Offer” provision in paragraph E of the Real Estate Brokers’ box on page 10 of the RPA. As revised, it states that if a buyer’s agent makes a written request to the seller’s agent to provide written confirmation that the buyer’s offer has been presented to the seller, the seller’s agent must comply. To make a written request, a buyer’s agent should use an email or cover letter (until C.A.R. provides an easier method). To comply with a request, a seller’s agent may use the separate “Presentation of Offer” box at the bottom of Page 10 of the RPA. This RPA revision reflects a new requirement imposed by both the NAR Code of Ethics (Standard of Practice 1-7) and MLS policy.
      The above changes to the RPA were also made to the 9 other C.A.R. purchase agreements, including the RIPA, PPA, CPA, and MHPA.
  • Trust Advisory (TA): The Trust Advisory has been revised to reflect a significant change in the law that will have the effect of generally requiring sellers that are trusts to complete the TDS, SPQ, and other sales disclosure requirements. Under existing law, a trust is generally exempt from the TDS and other disclosure requirements, unless the trustee is a natural person who is the sole trustee of a revocable trust, and has personally owned or occupied the property within the last year. Many trusts, however, have co-trustees (e.g. spouses), rather than sole trustees, and as such, they are exempt from the TDS and other requirements under existing law. Yet, it doesn’t make much sense for co-trustees to be TDS exempt, but not sole trustees. Hence, beginning January 1, 2019, the word “sole” has been removed from the law, and a trustee will be required to complete the TDS, SPQ, and other disclosures as long as he or she: (1) is a natural person; (2) is a trustee of a revocable trust; and (3) has personally owned or occupied the property within the last year.
  • Seller Multiple Counter Offer (SMCO): The SMCO has been revised to address a frequently asked question. If a seller issues an SMCO, and the buyer accepts the SMCO subject to a Buyer Counter Offer (BCO), what should a seller who wants to accept that buyer do? Should the seller: (1) Sign Selection of Accepted Multiple Counter Offer in Paragraph 8 at the bottom of the SMCO, and sign Acceptance on the BCO; or (2) Just sign the BCO? The SMCO has been revised in Paragraph 8 to clarify that the seller should just sign the BCO.
  • Buyer Pre-Occupancy Storage Addendum (POSA): This new form is an agreement for a buyer to store household furnishings in the seller’s property before close of escrow. Regardless of the availability of this form, you should always strongly discourage your clients, whether they are sellers or buyers, from entering into a storage agreement (as stated in the advisory box at the bottom of the POSA).

Source: More information is available on C.A.R.’s Standard Forms webpage for the December 2018 Forms Release  (password-protected for C.A.R. members only). This webpage includes a Quick Summary of the December 2018 C.A.R. Forms Release, as well as draft copies of 2 new forms and redline versions of 32 revised forms. Although there are many revised forms, a large number of them have merely been updated with the same revisions as for the AD and RPA discussed above. Also, many form revisions involve minor changes, such as clarifications in the wording used, and changes to the acronyms used to identify certain forms.

Copyright© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of December 10, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.

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