December 31st, 2018 at 11:15 am
Happy New Year Everyone! The New Year brings many new laws that may affect your real estate practice. Most of these new laws have previously been reported to you. However, here is, all in one place, a quick recap of some significant changes:
- Listing Agreement Can Be Delivered ASAP: Under preexisting law, a real estate agent was required to deliver to a client a copy of a listing agreement or buyer broker agreement at the time of signing. Starting January 1, 2019, an agent may now deliver a copy as soon as reasonably practicable after obtaining the client’s signature (e.g. by emailing a copy to the client).
- Delivery of Third AD No Longer Required: Starting January 1, 2019, a buyer’s agent presenting a buyer’s offer will no longer be required to give an Agency Disclosure Statement (AD) to the seller to sign. A listing agent must still provide an AD to the seller before entering into a listing agreement, and a buyer’s agent must still provide an AD to the buyer before writing an offer to purchase.
- TDS Likely to Be Required for Most Trusts: Many trusts will no longer be exempt from the TDS, SPQ, and other disclosure requirements (see C.A.R.’s Trust Advisory for full list). Under preexisting law, many trusts were exempt from certain disclosure requirements because the trustee of the trust was not a “sole” trustee. Effective January 1, 2019, the word “sole” has been removed from the law, and either a sole trustee or joint 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 preceding year.
- Buyer has a 5-Day Right to Cancel Upon Email Delivery of TDS: Under preexisting law, a buyer has a right to cancel a purchase agreement within 3 days after receiving a TDS or amended TDS in person, or 5 days if delivered by mail. Starting January 1, 2019, the TDS law has been expanded to provide a buyer with a 5-day right to cancel after delivery by email. Paragraph 10A(7) of C.A.R.’s Residential Purchase Agreement (RPA) has already been revised to reflect this change in the law.
- Attempt by Buyer’s Agent to Delay Delivery of TDS Will Be Ineffective: As background, apparently when certain buyers had no contingencies, their own agent would try to preserve the buyer’s right to cancel by intentionally refraining from completing or delivering that agent’s section of the TDS. Commencing January 1, 2019, the timeframe for the buyer’s right to cancel shall begin upon completion and delivery of the seller’s sections of the TDS (Sections I and II) and the listing agent’s section (Section III), regardless of whether the section for the buyer’s agent (Section IV) is completed. Paragraph 10A(2) of the RPA already reflects this change in the law.
- Dual Agent’s Confidentiality Defined: Absent a client’s express permission, a dual agent is prohibited from divulging the seller’s confidential information to the buyer, or the buyer’s confidential information to the seller. Such confidential information includes any facts relating to a client’s financial position, motivations, bargaining position, or other personal information that may impact price.
- “Selling Agent” is Now “Buyer’s Agent”: All previous references in the law to the antiquated and confusing term, “selling agent,” will now be replaced with the term, “buyer’s agent.”
These new laws and many other new laws that may affect your real estate practice are available at C.A.R.’s New Laws webpage (password-protected for C.A.R. members only). The full text of the California Senate and Assembly Bills is available at the California Legislature website.
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 31, 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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