C.A.R.’s Forms Release 2 weeks ago included several under-the-radar revisions that agents may find significant. C.A.R. does not generally announce these changes because they are considered to be “silent changes” to correct typos and other minor matters. Here, however, are 2 recent “silent changes” that agents should be aware of:

1. Counter Offer Does Not Change Buyer’s Deposit: When using a C.A.R. counter offer to propose a new purchase price, the boilerplate language states that, unless otherwise agreed, the “down payment and loan amount(s) will be adjusted in the same proportion as in the original Offer.” The boilerplate language, however, does not address the buyer’s deposit, which means it remains unchanged. This may be a surprise to some agents.

The newly revised counter offer now affirmatively states that “deposit amount(s) shall remain unchanged from the original Offer.” This revision applies to the Seller Counter Offer (SCO), Seller Multiple Counter Offer (SMCO), and Buyer Counter Offer (BCO).

As an example, let’s say that a buyer submits an offer to the seller for $900,000 with 80% financing and a $27,000 initial deposit. If the seller uses the SCO to counter offer at $1 million, and the seller says nothing about the down payment, loan amount, or deposit, the down payment and loan amount will increase to $200,000 and $800,000 respectively, but the initial deposit will remain unchanged at $27,000. To increase the initial deposit to 3%, the seller must add such a provision in the SCO.

The reason that the C.A.R. counter offers do not proportionately adjust the deposit is because, although 3% deposits are common in Southern California, practitioners in other places who use C.A.R. forms are accustomed to the deposit being a certain dollar amount, e.g. $10,000. Hence, they do not want the deposit to adjust proportionately when a new price is proposed.

2. Contingency Removal Form Has More Options: The C.A.R. Contingency Removal (CR) form has been revised to give the buyer 3 options for removing the inspection contingency: (1) Remove the buyer’s physical inspection contingency; (2) Remove all the buyer’s investigations other than a physical inspection; or (3) Remove the entire buyer’s investigation contingency.

This breakdown of the buyer’s inspection contingency in the CR is now consistent with what a seller may propose when using an RRRR form (i.e., the Seller Response to a buyer’s Request for Repairs). Some agents may not have realized that, when a seller requests a buyer to remove “the physical inspection contingency” under paragraph 2A of the RRRR, that is only a portion of the buyer’s entire investigation contingency.

Copyright© 2019 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 July 8, 2019. 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.