During the week of June 24, 2024, C.A.R. plans to roll out its June Standard Forms Release. Their rollout includes roughly 50 new and newly revised forms. However, C.A.R. has decided to delay for now the release of 21 additional forms related to the recent NAR Settlement Agreement.

Here are some of the highlights of C.A.R.’s June 2024 Forms Release: 

-Residential Purchase Agreement (RPA): Revisions to the RPA include the following provisions in chronological order:

1. Insurance Contingency: As reported in detail in last week’s Legal Tip, the RPA will include a new stand-alone insurance contingency (see RPA paragraphs 3L(4) and 8D). The insurance contingency will give buyers an opportunity to determine the availability of affordable insurance, without risking the loss of their escrow deposit. The Notice to Buyer to Perform (NBP) and Buyer Contingency Removal (CR-B) have also been revised to include the insurance contingency.
2. Holes: The RPA has been revised to indicate that a seller is generally not responsible for repairing any holes left by wall hangings, nails, or other fastening devices (see RPA paragraph 7B). However, there is an exception under preexisting RPA language. Under paragraph 9C, a seller must still remove any brackets for attaching audio-visual components (such as TVs and speakers), and repair any holes or damage caused by removal (but not paint), unless otherwise agreed.
3. Wooden Balconies: For any building containing 3 or more dwelling units with an elevated wooden balcony, stairway, or other structure, paragraph 11N of the RPA informs the seller to give the buyer the new Wooden Balconies and Stairs Addendum (WBSA). The WBSA, in turn, notifies the seller that, starting January 1, 2025, the seller must generally provide the buyer with an inspection report showing that the elevated structures are in good working condition.
4. Notice to Buyer to Perform (NBP): As addressed in a prior Legal Tip, the old version of the RPA seemed to say in paragraph 14E that, if an NBP to remove contingencies is timely served for one contingency, but served too soon for a second contingency, the entire NBP was invalid. Yet, that plain reading of the old version of paragraph 14E was directly contradicted by the first paragraph of the NBP form, which says that, with respect to the 2 contingencies described above, the NBP is valid for the first contingency, but void for the second one. Now paragraph 14E of the RPA has been revised to conform with the first paragraph of the NBP. The RPA now says that the NBP is valid for the first contingency, but void as to the second contingency.
5. Fair Appraisal Act Notice: The language in the stand-alone, one-page Fair Appraisal Act Addendum (FAAA) has been incorporated into paragraph 29 of the RPA. The stand-alone FAAA will no longer be required (or auto-bundled with the RPA in zipForms).
6. Real Estate Brokers Section: The Compensation section on the last page of the RPA used to say that a buyer’s broker would receive the amount of compensation specified in the MLS if applicable, or as specified in a separate Cooperating Broker Compensation Agreement (CBC). C.A.R. removed the reference to the MLS in anticipation of the upcoming prohibition of MLS offers of compensation under the NAR Settlement that will be coming into effect on or about August 17, 2024. Without that reference to the MLS in the Compensation section, buyers’ agents are well-advised to exercise an abundance of precaution by getting a CBC signed by the listing agent.
7. Designated Electronic Delivery Address (DEDA): If a listing agent has a DEDA under the RPA, that means that any document will be deemed “delivered” to the seller as soon as it has been electronically sent to the listing agent’s designated email address, regardless of receipt. The same thing goes for the DEDA of a buyer’s agent. Before the current RPA revisions, agents could opt into using their email address as a DEDA. With the June 2024 revision, it’s now the complete opposite. Agents’ email addresses will be considered DEDAs unless they opt out (see RPA paragraph 25K). To opt out, an agent must complete and submit C.A.R.’s Designated Electronic Delivery Address Amendment (Form DEDA).

-Seller Property Questionnaire (SPQ): Under a new law effective July 1, 2024, sellers that fall under the TDS requirement, who recently acquired title themselves within the last 18 months, must disclose certain renovation-related matters to their buyer. The required disclosures for these “flipper” sellers are set forth in paragraph 7F of the SPQ. Other new matters addressed by the SPQ include: (1) Inspection reports for elevated balconies and other structures for 3+ unit buildings (paragraph 6K); (2) Existence of a solar power system (paragraph 8B); and (3) Tenant occupancy (paragraphs 18D and E).

-Residential Lease Documents: Starting July 1, 2024, a new law limits the maximum security deposit that a residential landlord can generally demand to the dollar equivalent of only one month’s rent, regardless of whether the property is furnished or unfurnished. Certain small-time landlords can still collect a security deposit equal to 2 months’ rent (furnished or unfurnished) if all of the following requirements are met: (1) The landlord is a natural person, a family trust, or an LLC if every LLC member is a natural person; (2) The landlord owns no more than 2 residential rental properties with a collective total of no more than 4 units offered for rent; and (3) The tenant is not an active military service member. C.A.R. has revised its standard-form Residential Lease or Month-to-Month Rental Agreement (RLMM) and Residential Lease After Sale (RLAS) to reflect the new law. C.A.R. has also drafted a new Security Deposit Disclosure and Addendum (SDDA) to be used for small-time landlords, and active military service members, when applicable.

Source: More information about C.A.R.’s June 2024 Standard Forms Release is available on C.A.R.’s Standard Forms webpage (password-protected for C.A.R. members only). The webpage includes a Quick Summary Guide of the June 2024 forms, as well as draft copies of the new forms and redline versions of the newly-revised forms.

Copyright© 2024 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 June 24, 2024. 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. Written by Stella Ling, Esq.