December 7th, 2011 at 12:07 am
As you know, CAR releases new and revised forms for our use twice per year, in April and November. In its latest release, CAR included a revised Addendum that has one important issue you should be aware of. As you know, the Addendum is used if additional terms need to be added to another document. In the document’s introduction, CAR included check boxes for the common documents that an Addendum may relate to. Over the years, those boxes have included the various purchase agreements that CAR has created. In this latest revision, however, they have added two listing type documents: the Residential Listing Agreement and the Buyer Representation Agreement (collectively the “Broker Agreements”). Additionally, in the signature block, they have added a signature line for the Broker. While this is fine and makes sense with regard to the Broker Agreements, it creates problems if the Addendum is being used in connection with a Purchase Agreement. After all, as the broker, we are not a party to the purchase agreement and therefore should not sign it. In fact, if we were to do so, in the context of a dispute, the buyer or seller could argue that we were are a party and try to hold us to the obligations of that agreement. As a result, signing an Addendum to a Purchase Agreement could actually increase our liability in a transaction.
As a result, please be very careful when using the new Addendum form (CAR Form ADM). Only sign that document if it is being used as an Addendum to the Broker Agreements. If it is not, and is instead an Addendum to one of the CAR Purchase Agreements, you should refuse to sign and instead should leave the Broker signature line blank. If you are questioned about this position, please explain to your client that we are not a party to their purchase agreement and that the signature is only to be used if the Addendum modifies the Broker Agreements. Of course, if you have any problem with this policy, please contact your manager or the Legal Department for help.
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