June 26th, 2017 at 10:15 am
C.A.R. just rolled out today, 4 new and 15 newly revised standard forms for its June 2017 Forms Release. Here are some of the highlights:
Residential Listing Agreement (RLA): A major change to the forms is that the arbitration clause has been removed from the listing agreement (but not the Residential Purchase Agreement or RPA). Among other things, the removal is perhaps an attempt to stop sellers’ attorneys from trying to require listing brokers to participate in buyer-seller arbitrations. Under the RPA, brokers are not required to participate in buyer-seller arbitrations. Yet, when a dispute arises, some sellers’ attorneys nevertheless try to force the listing broker to participate in a buyer-seller arbitration, by arguing that the listing broker must arbitrate under the listing agreement anyway. That argument can no longer be made with the arbitration clause removed not only from the RLA, but also 8 other listing agreements.
Residential Lease or Month-to-Month Rental Agreement (LR): The LR form has been revised to allow a landlord to cancel a lease for nonpayment before a new tenant moves in. To cancel, the landlord must first serve the tenant with a 2-day notice to pay any unpaid amount that has come due (see Forms PPN and CLR below). The LR also has a new checkbox for attaching the Residential Environmental Hazards Booklet. Always check that box and give the booklet to a new tenant because doing so shields the landlord and agent from potential liability. The law deems delivery of the booklet to be adequate in informing the tenant about the environmental hazards contained in the booklet, such as asbestos, mold, and radon. The revised LR also, among other things, prohibits the growing or selling marijuana (paragraph 11I); prohibits smoking unless a box is checked (paragraph 14); allows the taking of marketing photos for a future sale or lease (paragraph 20); prohibits short-term rentals, such as Airbnb (paragraph 22); provides a checkbox for the landlord to require the tenant to obtain liability insurance (paragraph 36); and allows the use of a Representative Capacity Signature Disclosure (paragraph 53).
Landlord Pre-Possession Notice to Tenant to Pay (PPN): As discussed above, a landlord may use the new PPN to give a new tenant, who has not moved in yet, a 2-day notice to pay an unpaid amount that has come due within 2 days, otherwise the landlord can cancel. The PPN is very similar to a Notice to Buyer to Perform for a sale transaction.
Cancellation of Lease (CLR): This form may be used by a landlord to cancel a lease before the tenant moves in, such as after serving the tenant with a PPN (see above). The CLR can also be used when a landlord and tenant mutually agree to cancel a lease.
Bed Bug Disclosure (BBD): Starting July 1, 2017, the law requires a residential landlord to provide this new disclosure form to new tenants to inform them about bed bug infestations. More information about the new Bed Bug Infestation law was provided in last week’s Legal Tip, which is available at Eww, Bed Bugs.
Trust Advisory (TA): The provisions in the TA have been rearranged so that the required disclosures for a trust now precede the exemptions for a trust. Moreover, C.A.R. previously had 2 trust advisories — one for sales (TA) and one for listings (TAL). Now a signature line for the listing broker has been added to the TA, and the TAL has been eliminated.
Source: More information is available on C.A.R.’s Standard Forms webpage here, which includes a Quick Summary of the June 2017 Forms Release, copies of the new C.A.R. forms, and redline versions of the revised forms.
Copyright© 2017 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 26, 2017. 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.
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