July 31st, 2023 at 1:33 pm
Multiple Choice Question: What do agents mean when they refer to the “5-Day Rule” as it relates to C.A.R.’s Residential Purchase Agreement (RPA)? Pick the best answer:
A. A buyer’s right to: (1) Review reports that the seller delivers late; and (2) Cancel based on something on those reports.
B. A buyer’s right to cancel when a new material fact affecting the property is discovered during escrow.
C. A buyer’s right to cancel under the TDS law.
D. Any of the above. (more…)
July 24th, 2023 at 3:09 pm
Background: A seller of one-to-four residential units located in a high or very high fire hazard severity zone, who is not TDS-exempt, must generally provide the buyer with C.A.R.’s Fire Hardening and Defensible Space Disclosure and Addendum (FHDS). This requirement pertains to a seller of a condominium unit or mobilehome. The FHDS states that the seller must generally obtain documentation of compliance with defensible space requirements before close of escrow, unless the buyer agrees to do it within one year after close of escrow (see paragraph 3C(1) of the FHDS).
Question: Should a buyer of a condominium unit sign an FHDS agreeing to obtain such documentation of compliance after close of escrow if the geographical area at issue is the HOA’s common area for which the HOA, not condo unit owner, is responsible for maintaining? (more…)
July 17th, 2023 at 2:49 pm
Background: As a reminder, C.A.R. recently released a new Buyer Contingency Removal (CR-B) form that is mostly the same as it was before. One notable revision, however, is that a buyer now has more options to check when removing the investigation contingency. The buyer can now remove the investigation contingency, except for fire and/or flood insurance (see paragraph 2C(4) of the CR-B).
Fact Pattern: A buyer in a pending sales transaction has a 17-day investigation contingency. On Day 17, the seller serves the buyer with a 2-day Notice to Buyer to Perform (NBP) to remove the investigation contingency. Right before the expiration of that 2-day timeframe, the buyer uses the newly-revised CR-B form to remove the “Entire Buyer’s Investigation Contingency, EXCEPT Fire Insurance and Flood Insurance.”
Multiple Choice Question: Can the seller cancel? Pick the best answer:
A. Yes, because the buyer has not removed the entire investigation contingency.
B. No, because the seller must first serve another NBP for the buyer to remove the fire/flood insurance contingencies.
C. No, because the buyer’s failure to obtain insurance is out of the buyer’s control.
D. No, if the buyer is acting in good faith to obtain fire and flood insurance. (more…)
July 10th, 2023 at 2:16 pm
As fair warning to everyone, today’s Legal Tip addresses an issue that you will want to know about before, not after, something goes wrong in one of your transactions!
Background: Last month, C.A.R. rolled out its June 2023 Forms Release, which included some new “clarification language” in C.A.R.’s Notice to Buyer to Perform (NBP). Unfortunately, the “clarification language” may actually cause confusion, as discussed below. But as a listing agent, you can easily sidestep this issue entirely by remembering that, under the Residential Purchase Agreement (RPA), a seller cannot serve an NBP for the removal of a buyer’s contingency until 2 days before the expiration of that contingency period (see paragraph 14E of the RPA).
Multiple Choice Question: Let’s say that a buyer with a signed purchase agreement has a 17-day inspection contingency, and a 25-day loan contingency. On Day 17 of the agreement, the seller serves the buyer with an NBP to remove all contingencies. Is the NBP valid? Pick the best answer:
A. Yes.
B. Yes for the removal of the inspection contingency, but not for the removal of the loan contingency.
C. Yes for the removal of the loan contingency, but not for the removal of the inspection contingency.
D. No. (more…)
June 26th, 2023 at 1:51 pm
On June 27, 2023, C.A.R. plans to roll out its June 2023 Standard Forms Release with changes to over 100 of its forms. Many of the changes are minor, including the changing of the word “Landlord” to “Housing Provider” for about 20 leasing forms, and an updated revision date for about 30 other forms. Here are some notable highlights of C.A.R.’s Forms Release: (more…)
