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2016 PRDS VS. CAR PURCHASE AGREEMENTS

The two documents used most frequently for purchasing and selling real estate in the Bay Area are the PRDS and the CAR purchase agreements. Learn more about the differences between these forms. 

COMPARING THE PRDS AND CAR® PURCHASE AGREEMENTS

Simon Offord, Esq., of the Law Offices of Peter N. Brewer

In California, a number of forms are used in real estate transactions. These forms cover a range of issues – from important conditions that must be met before the deal can close to specifics about which party pays which fees. Standardized forms are most frequently used for these transactions. Two of the most widely used standardized purchase contracts are the PRDS (Peninsula Regional Data Service) purchase agreement and the CAR (California of Realtors®) purchase agreement. While the objective of these two forms is the same – selling a home – there are distinct differences between the two forms that are important to understand. Certain default terms differ between the contracts. Certain clauses that are present in one form are absent in the other. Knowing the differences between the forms – what is included and what is not – is essential before using either one of the forms.

SIMON OFFORD,
REAL ESTATE ATTORNEY

Watch and listen to Simon Offord, a real estate attorney at the Law Offices of Peter N. Brewer, explaining the real estate ecosystem in the Bay Area. He discusses the two most widely-used contracts – the PRDS and the CAR purchase agreements – and why it is important to understand the differences between the two forms.

CHOOSE A TOPIC

FINANCE TERMS

AGENT-HELD DEPOSITS

The CAR form has an option for the deposit to be held by the agent (Section 3(a)). The PRDS form does not have an option for an agent-held deposit.

SPECIAL LOANS & FINANCING

The CAR form has more room to discuss specific loans, such as FHA & VA loans. The PRDS form does not have this section, but it does have a separate line item for seller financing.

BUYER PRE-APPROVAL

The default PRDS form default is that the buyer’s pre-approval is included with the offer (2(h)). The default for the CAR form is the pre-approval is received within 3 days of acceptance.

APPRAISALS

Both contracts have a separate appraisal contingency, however the CAR contract explicitly provides that if there is no appraisal contingency, or the appraisal contingency has been removed, the failure of the property to appraise does not allow cancellation under the financing contingency (3(J)(2)). 

ITEMS INCLUDED IN SALE

The PRDS purchase agreement generally has a more robust section for selecting specific items to be included in the sale, which makes it easier to follow and track. 

TV/AUDIO EQUIPMENT

The CAR purchase agreement automatically excludes TV/audio equipment. The CAR form also has a default option stating that TV brackets will remain, with an alternative option of removing and patching (but not painting). 

The PRDS form leaves TV & audio equipment to be selected in check boxes, but if brackets are excluded, the seller is supposed to bring surfaces “as close to original condition as is reasonable and practical”. 

LEASED ITEMS

The CAR purchase agreement has a default of 7 days as part of other disclosures.

The PRDS form has a default of 5 days to provide leases. 

DISCLOSURES

Click through the following sliding panels to see the many differences between how the PRDS and CAR purchase contracts deal with disclosures.

CLOSE ESCROW

CAR

The CAR purchase contract deals with the close of escrow in the very first paragraph, and the default close date is a specific date.

The CAR form does not discuss what happens if close occurs on a non-business day.

The CAR agreement states that possession is to be delivered at 6pm. 

CAR has a separate Demand to Close Escrow form, referenced in 14(g).

The CAR purchase agreement has a more robust advisory within the contract about the specifics of seller occupancy post-close (9). 

PRDS

The PRDS agreement default for closing specifies a date for the “recordation and delivery of keys”. 

The PRDS contract states that, if closing occurs on a non-business day, the close will occur on the next business day.

PRDS has possession to be delivered at 5pm. 

PRDS does not have a Demand to Close Escrow form, and explicitly states that a Notice to Perform is not required to enforce close of escrow (21(a)). 

The PRDS form deals with post-closing seller occupancy in a separate Occupancy Agreement. 

TITLE & ESCROW

The PRDS form requires that the same party pay for both the escrow fees and the owner’s policy of title insurance (17). CAR allows the parties to separate out payment of escrow fees vs. title policy costs.

PRDS allows for a separate title contingency period (83). The CAR default is that the title contingency period is the same as other inspection contingencies. 

AS-IS PROVISIONS

DEFAULT VS. OPTIONAL

The As-Is Provision in the PRDS form is optional, and allows for exceptions to be added. The CAR contract makes the As-Is Provision the default. 

PEST CONTROL & REPAIRS

If the As-Is Provision is selected in the PRDS contract, the Pest Control & Obligation to Repair paragraphs are automatically deleted. Since the As-Is Provision is automatic in the CAR form, the CAR contract does not do this. 

REPORTING DEFICIENCIES

Under the PRDS contract, the seller has an obligation to repair or correct all known deficiencies prior to the close of escrow, and requires no roof leaks and all appliances, plumbing, and HVAC to be operable. The CAR contract does not have this presumed in the As Is Provision. 

CONTINGENCIES

LOCATION

The PRDS contract lists many of the contingencies in one place, with blanks to be filled to indicate the number of days for each contingency. 


The CAR contingencies are spread out in the agreement and are dealt with in the section relevant to each contingency. 

NOTICE TO PERFORM

Both contracts have the Notice to Perform requirement, but the PRDS specifically states that, if the last day to perform falls on a non-business day, then the recipient shall have until the next business day.


The CAR form does not allow a Notice to Perform to be delivered more than 2 days prior to the expiration of the time to remove the contingency. PRDS allows the Notice to Perform to be sent earlier. 

REPAIRS

The PRDS purchase agreement specifies that repair work needs to be done by a licensed contractor. 


The CAR agreement does not explicitly require a licensed contractor, but does require more paperwork.

CANCELLATION & DEPOSITS

The CAR purchase agreement has a specific form that allows either part to send a written demand to the escrow holder to deliver the deposit to them. If the other side does not object to the demand within 10 days, then the escrow holder can disperse the funds.


The PRDS form has no such provision. 

MAINTENANCE

The PRDS contract has a separate paragraph dedicated to the seller’s obligation to maintain and deliver the property – “broom clean”. The form also recommends an insurance policy.


The CAR agreement offers a much more limited explanation of maintenance, basically stating the property shall be maintained in substantially the same condition.

HOME PROTECTION PLAN

Both contracts allow for the parties to negotiate as to who pays for the Home Protection plan. However, only the PRDS form has an option to select who specifically orders the plan. 

PROPERTY TAXES/HOA FEES

The CAR agreement is negotiable as to who pays which taxes and HOA fees. 


The PRDS purchase contract has set requirements as to who pays what fees. 

ASSIGNMENT

The PRDS contract expressly prohibits assignment, absent written consent from the seller, and provides a timeline for addressing the assignment.


The most updated CAR form now also requires seller consent for assignment. 

RISK OF LOSS

The PRDS purchase contract states that if the property is “materially damaged” prior to close, then the buyer has the right to cancel the contract.


The CAR agreement does not include any such language, instead apparently relying on Civil Code § 1662.

LIQUIDATED DAMAGES

Both the PRDS and the CAR purchase contracts have comparable liquidated damages provisions. However, the PRDS form makes more of an effort to explain the potential damages for default by either party.

OFFER ACCEPTANCE

PRDS requires a date to be filled in (30).


CAR’s default is that the offer is revoked after 3 days, but allows a specific date to be inserted instead (31).