On December 21, 2020, C.A.R. released its biannual standard-forms update, including 2 new forms and 5 revised forms. Here are some of the highlights:

• Home Fire Hardening Disclosure and Advisory (HHDA): Effective January 1, 2021 for properties with one-to-four residential units built before 2010, a seller who is subject to the TDS requirement should also complete the new HHDA as an additional disclosure requirement. A seller completing the HHDA should inform the buyer as to whether the property is located in a high or very high fire hazard severity zone (see paragraph II.1. of the HHDA). The seller must also disclose whether the seller is aware of certain home features that may make the property vulnerable to wildfire, such as excessive ventilation as specified, untreated roof shingles, and combustible materials nearby (see paragraph II.3.). Under preexisting law, a seller must generally provide a buyer with a Natural Hazard Disclosure (NHD) Statement disclosing whether the property is located in any of 2 fire hazard zones, 2 earthquake hazard zones, or 2 flood hazard zones. The first fire hazard zone identified in the NHD Statement is a “very high fire hazard severity zone,” which is also a required disclosure under the new HHDA. However, the second fire hazard zone identified in the NHD Statement is a “wildland area,” which is not the same as the “high fire hazard severity zone” required under the new HHDA. Sellers who do not know whether their property is located in a “high fire hazard severity zone” may be able to obtain that information from, among other resources, their NHD provider, their insurance agent, or online maps provided by governmental agencies. C.A.R. is working to get NHD companies to add “high fire hazard severity zones” to their NHD statements.

• Fair Housing and Discrimination Advisory (FHDA): Released back in October 2020, the FHDA addresses anti-discrimination housing laws and guidelines. The FHDA specifically mentions the possible discriminatory effect when a seller reviewing offers also considers buyers’ love letters, especially those with photos (see paragraph 8 of the FHDA). The FHDA is auto-bundled in zipForms with C.A.R.’s listing agreements, purchase agreements, and lease agreements.

• Contingency for Sale of Buyer’s Property (COP): Given that the COP is one of the most complicated C.A.R. forms, C.A.R. reformatted the form in an attempt to make it more user-friendly. However, instead of just one sale contingency, the COP now gives buyers 3 options, which are, to make the purchase of the subject property contingent upon: (1) the buyer entering into a contract to sell an existing home; (2) the buyer closing escrow on the existing home; or (3) both (1) and (2) (see paragraph 1 of the COP). The COP also gives the seller the right to request status updates on the sale of the buyer’s existing home (see paragraph 5). Additionally, the seller now has a list of 7 possible reasons to cancel (see paragraph 8), rather than the previous 4 reasons to cancel. As for a seller’s opportunity to go with a backup buyer, the COP previously required a seller who has entered into a backup contract to give a 3-day notice to the buyer in first position to remove the sale contingency, remove the loan contingency, and provide proof of sufficient funds to close escrow without selling the buyer’s existing property. That 3-day notice has now been shortened to only 2 days (unless otherwise indicated) (see paragraph 7). To serve that special 2-day notice for backup situations, the seller should use the very bottom of page 2 of the COP form itself, and not a separate Notice to Buyer to Perform (NBP). However, when you as the listing agent serve the bottom of page 2 of the COP as that special notice, be sure to clarify on a cover sheet or something precisely what your seller is doing, because many buyers and buyers’ agents do not understand what the bottom of page 2 of the COP is for.

• Notice to Buyer to Perform (NBP) and Contingency Removal (CR): The NBP and CR have been revised to address the 3 types of COP contingencies for entering into a contract to sell the buyer’s existing home, closing escrow on the buyer’s existing home, or both (see explanation above). The NBP has also been revised to allow a seller to request the buyer’s Representative Capacity Signature Disclosure (RCSD) and evidence of the representative’s authority to act.

• Rent Cap and Just Cause Addendum (RCJC): C.A.R. has moved the checkbox in the RCJC for landlords to indicate that they are exempt from the 2020 Statewide Rent Control law. The checkbox was previously at the bottom of page 2, and has now been moved to the top of page 1 for ease of reference. As background, the RCJC informs residential tenants about California’s Statewide Rent Control. The Statewide Rent Control requirements do not apply to, among other exemptions, an owner of a single-family residence or condo if 2 conditions are met: (1) the owner is not a corporation, an LLC with a corporation as a member, or an REIT; and (2) the tenant has been given the RCJC as a notice of exemption. Do not confuse Statewide Rent Control with California’s COVID-19 Tenant Relief Act which, among other things, generally prohibits the termination of residential tenants absent a “just cause” reason as defined. Generally speaking, landlords who are exempt from Statewide Rent Control must nevertheless comply with the COVID-19 Tenant Relief Act. However, the COVID-19 Tenant Relief Act is scheduled to expire on January 31, 2021 unless extended. As a reminder, our company does not provide any property management services to clients after a landlord and tenant have entered into a lease agreement.

• Square Footage and Lot Size Advisory (SFLS): The SFLS has been revised to clarify that it can be given as an advisory to a buyer, even if it does not contain any actual square footage measurements. Additionally, the signature lines on the SFLS have been separated out, so that sellers can acknowledge that they are not aware of any other measurements, whereas buyers can acknowledge that they have been advised to investigate into square footage measurements.

Source: More information is available on C.A.R.’s Standard Forms webpage (password-protected for C.A.R. members only). The C.A.R. webpage includes a Quick Summary of the December 2020 Forms Release, as well as draft copies of the new forms and redline versions of the revised forms.

-Happy Holidays to you and your loved ones! The magic of the holiday season lies in your heart.

Copyright© 2020 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 21, 2020. 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.