New and Revised C.A.R. Forms for December 2023

JOHN V. GIARDINELLI, ATTORNEY AT LAW | OF COUNSEL & CRYSTAL PETERSON, ASSISTANT PROFESSIONAL STANDARDS ADMINISTRATOR

November 17, 2023

At the California Association of REALTORS® (C.A.R) business meetings in September 2023, the Standard Forms Advisory Committee released the list of new and revised forms.  This list includes one (1) new form, 38 revised forms, five (5) new and/or revised business forms, and three (3) new and/or revised short term (vacation) rental forms.   Below is a summary of the forms and/or revisions you can expect to see released in December 2023.

NEW FORM

1. Buyer Homeowners' Insurance Advisory (BHIA)

This form highlights the significance of securing property insurance, details the difficulty of obtaining property insurance, the contract issues that can impact insurance, and provides contact information for the consumer’s questions on insurance.  C.A.R. strongly advises distributing the form to a buyer promptly after establishing an agency relationship.

Property insurance is becoming increasingly difficult to obtain due to California’s share of natural disasters and the reality that some major insurance companies have stopped or limited writing new policies.  This form allows agents to address these issues up front.

REVISED TRANSACTIONAL FORMS WITH SUBSTANTIVE REVISIONS

1. For Your Protection: Get a Home Inspection (HID)

This is a new form that basically replaces the previous version, HUD Notice to Purchase, with substantive content equivalent to the previous version.  This form is required for FHA transactions and addresses the importance of a home inspection prior to purchase.

2. Residential Lease or Month-to-Month Rental Agreement (RLMM)

This form was updated to address the responsible payor, whether housing provider or tenant, for periodic pest control service that is already in place.  However, it is only applicable if the subject property is a house.  

Additionally, revisions were added to advise the housing provider and tenant that city, county, or other local requirements imposed may apply to the Agreement.

3. Single Party Compensation Agreement (SP)

In this Agreement, revisions were made throughout to conform to listing agreements.  These include updates regarding broker compensation, agency relationships, dispute resolution, management approval, and successors and assigns to those in the listing agreement.  Additionally, the legally authorized signer and signature paragraphs were updated to address entity signers without need for the Representative Capacity Signature Disclosure (RCSD).

4. Seller Property Questionnaire (SPQ)

With Accessory Dwelling Units (ADU) on the rise, question 8D was added to address whether any structure on the property is, in fact, an ADU, and whether that ADU received permits and has separate utilities.  Question 18C was added to clarify whether the property was constructed as a manufactured or mobile home.

5. Seller's Purchase of Replacement Property (SPRP)

This addendum added language in 1A, 1C, and 4B requiring the seller to give proof of having entered into a contract to purchase or lease replacement property if the seller removes the Finding Replacement Property Contingency.  

6. Tenant Estoppel Certificate (TEC)

This form was completely reformatted to include a grid making it easier to see the questions in General Terms and allowing for additional space for the answers that are completed by the tenant.

7. Tenant Occupied Property Addendum (TOPA)

This form, used when selling tenant occupied 1–4-unit properties, added paragraph 2E(7) to address the existing legal requirement of a seller to notify the buyer of the security deposit remaining and an itemization of the use of the security deposit even though paragraph 2A already requires the seller to transfer the security deposit to the buyer.

REVISED TRANSACTIONAL FORMS WITH NON-SUBSTANTIVE REVISIONS

1. Bill of Sale (BOS)

Per C.A.R., this updated Bill of Sale will provide more flexibility regarding the condition of personal property.  The form added language to include Joint Escrow Instructions and, if applicable, the sale of the business operation described in the Agreement.  Paragraph 4A(D) was included to allow for exceptions to seller representations.  In paragraph 4B(1) additional language was added to include any express warranties.

The form also removed the required notary signature and made the notary signature optional.  Should a notary signature be required, the notary will have to attach an appropriate acknowledgement form.

REVISED TRANSACTIONAL FORMS WITH NON-SUBSTANTIVE REVISIONS & NO DATE CHANGE

1. Seller Response and Buyer Reply to Request for Repairs (RRRR)

In this form, language was added to clarify two points: 1) the seller agreement is limited to the items checked; and 2) the buyer agreement to remove investigation contingencies requires the buyer to either sign the RRRR or sign a CR form.

2. Assignment of Agreement Amendment (AOAA)

The only change in this form was the added language to clarify that the buyer has not and will not receive compensation for the assignment.

3. Commercial Purchase Agreement (CPA)

The only update to this form is the added language to paragraph 14, which now includes both security deposit and prepaid but unearned rent as possible funds transferred to the buyer.

4. Notice of Change in Terms of Tenancy (CTT)

Here, a notice to the tenant was added to inform the tenant that once the Notice of Change has been delivered, the change will take place with or without the tenant’s signature.

5. Independent Contractor Agreement (ICA)

The only change to this form was the updated link to the California Code of Ethics and Arbitration Manual, which went live in July.

6. Property Management Agreement (PMA)

This form changed the language in paragraph 6A to make it clearer that some forms apply to clients that are not California residents, or not qualified entities, and some forms apply to those clients that are California residents and qualified to do business in California.

Below is a list of revised transactional forms that were reviewed by C.A.R. for accuracy and given a new date:

• Commercial Lease (CL)

• Commercial Confidentiality and Non-Disclosure Agreement (CML-CNDA)

• Commercial – Environmental Issues Addendum (CML-EIA)

• Commercial – Landlord’s Environnemental Consent (CML-LEC)

• Commercial Release Agreement (CML-REL)

• Delivery of or Failure to Deliver Short Sale Lender Written Consent (DSSC)

• Employee Estoppel Certificate (EEC)

• Loan Broker-Sales Broker Disclosure (LBSB)

• Mortgage Assistance Relief Services Offer of Mortgage Relief Notice (MARSMRN)

• Mortgage Assistance Relief Services Short Sale Negotiation Notice (MARSSN)

• Manufactured Home Dealer Addendum (MHDA)

• Mortgage Loan Disclosure Statement Substitute (MSS)

• Office Management Agreement (OMA)

• Personal Assistant Contract (PAC)

• REALTORS® Acknowledgement (RA)

• REO Advisory (Listing) (REOL) – this was reformatted to be consistent with Trust and Probate Advisories

• Radon Gas and old Notice and Release Agreement (RGM)

• Seller Owned Fictitious Business Name Agreement (SOFBN)

• Transaction Cover Sheet (TCS)

• Broker/Associate-Licensee/Assistant Three-Party Agreement (TPA)

• Water-Conserving Plumbing Fixtures and Carbon Monoxide Detector Notice (WCMD)

• Water Heater Statement of Compliance (WHS)

• Water Heater and Smoke Alarm Statement of Compliance (WHSD)

NEW & REVISED BUSINESS FORMS

1. Business Listing Agreement (BLA)

This form applies to a business only and not to the real property on which the business is located.  The seller is to complete and allow the broker to provide a Business Disclosure Statement to the buyer.  The form accommodates over 30 optional elements for consideration, which includes inventory, furniture, fixtures, equipment, leases, social media accounts, goodwill, fictitious business names, customer deposits and gift certificates, and financial statements.  Additionally, there is an optional provision that allows for the request for a confidentiality agreement to be signed by the buyer.

2. Business Purchase Agreement (BPA)

This form was updated to conform to the Residential Purchase Agreement as much as possible, including the updated grid.  The updates include the option to purchase a business with a filed fictitious business name and the option to purchase the real property the business operates on at close of escrow.  

The type of loan defaults to an SBA loan, allowing for the loan to be secured by the assets of the business – furniture, fixtures, and equipment (FFE) – but not inventory.  An option to secure seller financing by a lien on other real property was added as well.  Additional contingencies will now include loan, investigation of business, environmental investigation, seller document, lease review, licenses and permits, and a franchise agreement.  

Finally, the revised form now makes the seller obligated to make disclosures on a Business Disclosure Statement and includes a seller’s minimum consulting period with an optional non-compete agreement.

3. Business Disclosure Statement (BDS)

The BDS allows the seller to document various aspects of the business by using the same terms specific in the BLA and BPA, such as inventory, machinery, fictitious business names, logos, social media, goodwill, financial statements, among others.  This form also allows for the identification of approximate inventory value and lease terms, facility description, notices of violation and operational hours of business.

4. Business Purchase - Allocation of Purchase Price (BP-APP)

This new, simple, one-page form was created in a chart format to allow for the breakdown and identification of the business for the purpose of assigning value to each asset.  C.A.R. recommends that the buyer and the seller should each discuss with appropriate professionals, such as a CPA or tax attorney, to properly value the business assets.

5. Business Purchase - Furniture, Fixtures, and Equipment (BP-FFE)

Another new, one-page form in chart format was developed to identify the tangible assets of the business and assign an estimated value to each item.

NEW & REVISED SHORT TERM (VACATION) RENTAL FORMS

1. Short-Term Rental Listing (STRL)

The former vacation rental listing form was renamed and overhauled to include many important updates.  This form is to be used when intended occupancy is either 30 days or less, or a seasonal rental between 31 and 90 days.  While the form default is that the broker will not manage the property, it does offer the option of having the broker manage the property if a management agreement is provided.

The Listing Terms now allocates for different rental periods and rates, which can include different rates for different days of the week, times of the year, and holidays.  This section also directs the broker to use the appropriate additional forms based on the days of occupancy.  (C.A.R. does note that 30 days is the maximum occupancy allowed for the collection of transient occupancy tax with some cities more restrictive, and, therefore, traditional landlord-tenant rules should not apply.)  Additionally, this section also breaks down items or rooms that may be included or excluded from the rental and any additional terms that may apply, such as community amenities or utilities provided.  

Owner-reserved dates have been expanded to allow the owner to reserve additional occupancy dates by giving notice to the broker.  Numerous revisions were made to the compensation to broker section, which now includes the option that allows the broker to be compensated if an occupant obtained during the listing period subsequently purchases the property.

The section on deposits was revised completely to clarify the deposit depending on the duration of the occupancy and who payments will be payable to.  New language was included in the sections regarding Multiple Listing Service and Security and Insurance to include specifics.  Additionally, new language was added to include the owner’s authority to lease or rent the property as a short-term rental with provision of license or permit number from the city or county, and, if the property is located within an HOA, confirming that the rental will be consistent with the HOA rules.

New language was added to the sections on tax withholding and broker and owner’s duties which now includes that the owner will complete a Rental Property Owner Disclosure for rentals that exceed 30 days.  Attorneys’ fees were added and substantial language to dispute resolutions was included.

Finally, C.A.R. included warnings in the title and broker signature section cautioning that the form is not binding unless it is signed by the broker or office manager.  

2. Short-Term Rental Agreement (STRA)

This form, intended for occupancies of 30 days or less only, has been revised to include an advisory to use the Seasonal Addendum for occupancy not to exceed 90 days.  The most common up-front fees were addressed and identified to include booking deposit, damage (not security) deposit, and transient occupancy tax.  Language was updated to reflect that the return of a damage deposit will follow the same process as the security deposit in tenant rentals.  Updates regarding animals include the requirement for the form Animals Terms and Condition Addendum (ATCA).  

3. Short-Term Rental Agreement - Seasonal Addendum (STRA-SA)

This form, intended for occupancies of more than 30 days but not to exceed 90 days, was developed to modify the STRA to address landlord-tenant laws that are likely to apply.  The damage deposit is limited to three (3) months’ rent for a furnished unit and rental payments cannot exceed the first month’s rent in advance, so payments for fees such as a booking deposit, cleaning deposit, or advance rent will automatically be treated as an additional damage deposit.  Statutory rental disclosures are identified and may obligate the owner to complete a Rental Owner Property Questionnaire (RPOD) for additional disclosures.

CONCLUSION

Should you have any questions or concerns regarding these forms, we encourage you to seek qualified counsel—either through an attorney or your local REALTOR® Association—for answers.

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