Fact Pattern: You are the buyer’s agent in a pending sales transaction. The listing agent just sent over the Transfer Disclosure Statement (TDS). Sections I and II of the TDS have been completed by the seller. For Section III, the listing agent has inserted “AVID to follow,” and no Agent Visual Inspection Disclosure (AVID) has been attached.

Multiple Choice Question: Should you have your buyer sign the acknowledgment of receipt on the TDS form? Pick the best answer:

A. Yes.
B. Yes, if the buyer inserts “Section III AVID has not yet been received” immediately above the buyer’s signature.
C. Yes, if you indicate in an email to the listing agent that the Section III AVID has not yet been received.
D. No. 

Answer: As a little background, the TDS law generally provides a buyer with a 5-day right to cancel upon electronic delivery of the TDS. In 2020, the TDS law was revised to clarify that the buyer’s right to cancel does not begin, unless the seller and listing agent complete Sections I, II, and III. When Section III just says “AVID to follow,” Section III does not appear to be complete. Under that circumstance, we would, as the buyer’s agent, want to protect our buyer in case the buyer wants to cancel within 5 days after receipt of the listing agent’s AVID.

For this week’s multiple choice question, all 4 answers are arguably correct. The “best answer,” however, simply depends on what you would want your paperwork to look like if an issue were to arise. From that perspective, the best answer is B.

As for Answer A, if our buyer signs the TDS today, before receipt of any AVID, our buyer should still have the right to cancel upon receipt of the listing agent’s AVID. Yet, consider these 3 scenarios where Answer B, inserting a notation that the AVID has not yet been received, may be a better approach than Answer A. One, perhaps the AVID was in fact delivered to us separately, and we somehow missed it. Two, perhaps the listing agent will eventually backdate the AVID to try to make it appear as if it was delivered before the buyer signed the acknowledgment of receipt. Or three, perhaps the listing agent will try to argue that the buyer’s signature on the TDS is a waiver of the buyer’s 5-day right to cancel, regardless of the AVID.

As a point of clarification, some agents do not like Answer B because they do not know how to manipulate zipForms to insert that language, but other agents do know how to do it (sometimes in red ink and/or bold-point font). At a minimum, a buyer or buyer’s agent can use a pen to insert those words in handwriting immediately above the buyer’s signature.

As for Answer C, a separate email also works, but Answer B is slightly better, because the “objection” is stated directly above the buyer’s signature. It’s all there on one document, instead of 2. If an issue arises, we won’t have to rummage around looking for that email. Also, at times, depending on the wording of the email, it can be difficult in litigation matters to prove which attachment went along with a certain email.

As for Answer D, not signing the TDS is also a viable option. These days, however, we tend to want to placate listing agents as best as we can, such as by having our buyers sign disclosures. Also, if our buyer does not sign, the listing side may issue a Notice to Buyer to Perform (NBP) for signatures, and we will have to explain why our buyer has not signed yet, and why the 2-day NBP should not apply in this instance.

Listing Agents Beware! Do your best to deliver your completed AVID at the same time as the seller’s TDS. Otherwise, you may inadvertently give the buyer more time to exercise his or her right to cancel under the TDS law.

-Thank you to Diana Lam (Pasadena Transaction Coordinator) for suggesting this week’s legal tip!

Copyright© 2022 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 May 9, 2022. 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.