On or about December 19, 2023, C.A.R. plans to roll out its December 2023 Standard Forms Release. The rollout entails just one new form and 55 revised forms. Here are some of the highlights of C.A.R.’s Forms Release: 

-New – Buyer Homeowners’ Insurance Advisory (BHIA): This new one-page form addresses the recent difficulties with obtaining affordable homeowners’ insurance, including fire and flood insurance. The BHIA informs buyers that their purchase contract may include a contingency for obtaining insurance. Under C.A.R.’s Residential Purchase Agreement (RPA), the buyer’s investigation into the availability and cost of insurance is part of the buyer’s investigation contingency (see paragraph 12B(2) of the RPA). The BHIA also advises buyers that they should explore their insurance options early in the home-buying process, and that their real estate agent does not have expertise in this area.

-Residential Listing Agreement (RLA) and Modification of Terms (MT): The RLA has been revised to indicate in paragraph 1 that the maximum listing period is 24 months for properties with one-to-four residential units (unless the seller is a corporation, LLC, or partnership). The MT form has also been revised to indicate that the maximum renewal period for an RLA is 12 months. These max caps are part of a new California law (AB 1345) that will come into effect on January 1, 2024. As for the Sitzer/Burnett lawsuit, C.A.R.’s attorney has stated that there are no current changes to the RLA in light of the commission issues brought about by that lawsuit, but that such changes may come in June 2024.

-Seller Property Questionnaire (SPQ): The SPQ now includes questions as to whether any of the structures on the property are Accessory Dwelling Units (ADUs), and if so, whether the ADU is permitted and has separate utilities and meters (see paragraph 8D). The SPQ also has another new question about whether the property was originally constructed as a manufactured home or mobilehome (see paragraph 18C).

-Seller’s Purchase of Replacement Property (SPRP): The SPRP that gives a seller a contingency for finding and/or acquiring a replacement property has been revised to conform more closely with the Contingency for Sale of Buyer’s Property (COP). The SPRP now requires the seller to provide the buyer with proof of the seller’s replacement property (e.g., copy of contract) (see paragraph 1A). Otherwise, the buyer may cancel (after first giving the seller a Notice to Seller to Perform) (see paragraph 5B). The SPRP has also been revised to provide that, if the contract for the replacement property is cancelled, the seller must notify the buyer within 2 days, after which, the buyer may cancel (see paragraphs 3 and 5D).

-Tenant Occupied Property Addendum (TOPA): The TOPA has been revised to require a seller delivering the property vacant of existing tenants to disclose certain matters to the buyer, namely: (1) when the property became vacant; (2) whether the tenant vacated voluntarily, and if so, whether the seller paid the tenant to leave; and (3) whether the seller sued to evict the tenant, and if so, whether a judgment was rendered (see paragraph 1B(3)). These matters may be of concern to a buyer in the event that, after close of escrow, the prior tenant attempts to assert a right to possession of the premises. The TOPA was also revised to address certain issues if the buyer is a current tenant (see paragraph 1C).

-Residential Lease or Month-to-Month Rental Agreement (RLMM): The RLMM has been revised to allow the landlord of a single-family home to allocate the cost of preventive periodic pest control services to the tenant (see paragraph 11G). Aside from such preventive measures, however, paragraph 11G does not address a landlord’s potential responsibility to meet basic habitability standards for an active infestation of rodents or vermin, depending on the circumstances. As for the difficulties with obtaining insurance, paragraph 29C of the RLMM has been revised to indicate that, if checked, the tenant shall obtain liability insurance that names the landlord as an “additional insured” if available; otherwise, as an “additional interest.” An “additional interest” means that the insurer must notify the landlord if the policy is changed, cancelled, or not renewed.

-Other Forms: C.A.R. has brought back its previously discontinued forms for selling a business (6 forms), and for doing a short-term rental (3 forms). C.A.R. has also reviewed for accuracy and updated the revision date for 25 forms. They also made minor changes to 9 other forms without changing the revision date.

Source: More information about C.A.R.’s December 2023 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 December 2023 forms, as well as draft copies of the new BHIA form and redline versions of the newly-revised forms.

Copyright© 2023 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 18, 2023. 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.