In December 2018, California Association of REALTORS® (CAR) released several new forms that brokers and real estate agents can use to simplify their operations. In addition, there were revisions released for several CAR forms, that impact how real estate transactions may be conducted. There are more forms and revisions coming down the pipeline, likely to be introduced in the Summer of 2019, and we will be sure to provide an update on those changes as well! Below is a summary of the new forms and the changes made to existing forms:
New Forms:
Revised Forms:
- Bed Bug Disclosure Form (BBD)
- Confidentiality & Non-Disclosure Agreement (CML-CNDA)
- Homeowner Association Information Request (HOA-IR)
- Receipt for Reports (RFR)
- Seller Response & Buyer Reply to Request for Repair (RRRR)
- Seller Multiple Counter Offer (SMCO)
- Single Party Compensation Agreement (SP)
- Tenant Flood Hazard Disclosure (TFHD)
- Residential Listing Agreement (RLA)
- Residential Purchase Agreement (RPA)
- Residential Lease (LR)
Brand New Forms
This newly-created form, called the Pre-Occupancy Storage Addendum, spells out the terms under which buyers can store their personal belongings in the property before the close of escrow. This form creates a license — not a lease — and helps protect sellers from potential claims by a buyer that they have a tenancy or right to be in the property. The form creates a license that terminates at the close of escrow or cancellation, and the buyer must remove items within 3 calendar days of the termination. During the process, the buyers cannot visit or check on their personal property. Additionally, certain items are not permitted, such as firearms, ammunition, and explosives. Buyers are responsible for all damages to personal property, and it is recommended that the buyer get insurance for the property, since the seller and/or the HOA are not liable. The form contains a broker disclosure advising the parties that the broker does not recommend pre-occupancy storage, and that each party seek legal counsel. [Back to Top]
The Summary of Offer – RIPA is a new, one-page form that provides sellers with the key terms of an offer. The form is a great marketing tool for buyers, as it allows the seller to see all the important terms of the offer, without going through pages of text. The form spells out the major parts of the offer, including purchase price, deposit, close of escrow, contingencies, loan amounts, and possession date. In the column next to the terms is a paragraph number, where the seller can easily find the full material terms within the offer. As the disclosure states on the form, the document does not operate as a standalone document and is not an offer, binding agreement, or letter of intent. There is no place for a signature, and so the summary of offer must be accompanied by a full and complete offer. [Back to Top]
Modified Forms
In 2017, the California State Legislature passed and Governor Brown signed a new law requiring that all landlords provide tenants with a bed bug disclosure notice. The form has been modified by adding a new section (Paragraph 7) that states a tenant shall report any potential bed bugs to the landlord or the property manager. If the tenant does not report the existence of bed bugs, then the tenant agrees to release, indemnify, and otherwise hold harmless the landlord and their agents from any and all claims based on the bedbugs. [Back to Top]
In today’s real estate market, more and more agents are using social media profiles like Twitter, Instagram, and Facebook to market their listings. While using the internet and social media can be a great way to garner attention for listings, it also poses significant risks of compromising the personal information of their clients. The Confidentiality & Non-Disclosure Agreement (CML-CNDA) has been modified in two ways, to better protect privacy and confidentiality:
- Paragraph 4F has been added to the form, which prohibits the disclosure of confidential information over the internet. The best practice may be for agents to have a ‘personal’ and a ‘business’ social media account, to help ensure they are being compliant
- Paragraph 6B(3) now allows for notice by e-mail, with a second copy send to parties by way of a secondary e-mail, fax, etc.
In California real estate transactions, it can often be a challenge to obtain important documents from a homeowner association, if the property is governed by one. The rules of the HOA are contained in the covenants, conditions, & restrictions (CC&Rs) of the HOA, and can make a huge impact on the desirability of a property, especially regarding ongoing issues with the HOA, financial reserves, and community rules. The HOA-IR form has been modified by adding verbiage from Civil Code Section 4530(a), to help inform the HOA what documents they need to produce, and on what timeline. The form also has a new section where the HOA can fill in information that the seller may not know or have access to. While many HOAs have their own form that they use, this standard form by CAR is intended to encourage compliance & timeliness in the process. [Back to Top]
The receipt for reports form (RFR) itemizes all of the many reports prepared during a transaction, such as inspections reports and title reports. It is a form for the buyer to acknowledge that he or she has received the reports. CAR recently changed the form to put the most common inspections on the top of the list, and also added additional space for writing in other inspections. Also, the biggest change to the form is that the seller does not need to respond making the form consistent with paragraph 14B(2) of the residential purchase agreement. [Back to Top]
The seller response & buyer reply to a request for repair form (RRRR) had a very small change implemented in late 2018 by CAR. The small change includes a disclaimer that any credit included in the form is separate from and shall not reduce or supersede any other credit in the RPA unless specifically agreed to in writing. [Back to Top]
In the situation where there are many counter-offers, it can start to get confusing as to what the parties are agreeing. The seller multiple counter offer form (SMCO) has been changed to where the seller must now sign the agreement a second time, in paragraph 8, and return it to the buyer for the agreement to be binding. During the first counter-offer, the contract becomes binding once the buyer returns it to the seller. However, after multiple-counter offers, this additional step is now required in order to have an effective agreement. If the buyer signs in paragraph 7, the “Subject to Attached Counter-Offer” section, and the seller agrees, then the seller will need to sign the counter-offer once again in order to have an effective agreement. [Back to Top]
The single part compensation agreement (SP) was changed to allow a broker to bind a landlord to the agreement. Language was added in Paragraph 1 of the form to including ‘Landlord’ as a “Principal”. [Back to Top]
New language has been added to the tenant flood hazard disclosure (TFHD) to make the default of the form that the property is NOT in a flood zone. Now, it requires an affirmative effort to indicate the property is in a flood zone. The form must be marked in checkbox A, B, C, or D if the property is in fact in a flood zone. Additionally, landlords and property managers can now be specific as to the type of flood zone. [Back to Top]
Two new sections have been added to the standard residential listing agreement (RLA). The first change is adding language stating that the seller consents to the broker providing a copy of the listing agreement to the Multiple Listing Service (MLS) if it is required by the MLS. Additionally, new language was added regarding the seller’s intent to include a contingency to purchase a replacement property as part of any resulting transaction. [Back to Top]
The National Association of REALTORS® (NAR) implemented a new Standard of Practice that requires a seller’s agent to respond in writing if a buyer’s agent makes an inquiry. As a result, the California RPA was modified by adding a new Paragraph E in the broker box, labeled ‘Presentation of Offer’. Language was also added to explain what is required based on the new national standard of practice. [Back to Top]
The only change to the residential lease for 2019 is the addition of the new Bed Bug Disclosure & Tenant Flood Hazard Disclosure forms. It is incredibly important to use the most current forms, so be sure to download the latest versions and begin using! [Back to Top]
