New and Revised C.A.R. Forms in 2023

California real estate laws and practices are constantly evolving.  At the forefront of the industry is the California Association of REALTORS® (“C.A.R.”), who, among other things, provides standardized forms utilized by professionals and practitioners in most areas of real estate practice.  This Newsletter notes revisions to existing forms that range from minor organizational and formatting changes to important substance and language changes, which render old versions of the forms out of date.  There are also a number of forms in both spheres, released December 19, 2022, that are completely new.

Note: information about the changes noted in this newsletter comes directly from C.A.R.

California real estate laws and practices are constantly evolving.  At the forefront of the industry is the California Association of REALTORS® (“C.A.R.”), who, among other things, provides standardized forms utilized by professionals and practitioners in most areas of real estate practice.  This Newsletter notes revisions to existing forms that range from minor organizational and formatting changes to important substance and language changes, which render old versions of the forms out of date.  There are also a number of forms in both spheres, released December 19, 2022, that are completely new.

Note: information about the changes noted in this newsletter comes directly from C.A.R.

Part 1: Purchase Agreement Related C.A.R. Forms

1. Residential Purchase Agreement and Joint Escrow Instructions (“RPA”)

There are a number of changes to this form. In terms of the more minor changes to the form, in paragraphs 3E(1) and (2) the language was changed so there was no default for points. A new “optional” paragraph was added as 3G(3) which allows the buyer to ask the seller to pay for the buyer’s broker. Paragraph 3M(3), which deals with units that are occupied by persons other than the seller, now contains an advisory applicable to counter offers that sellers should add TOPA to the counteroffer if a tenant or occupant did not check the box to add the form. Additionally, paragraph 7(a) includes new language in which the unit the buyer intends to occupy needs to be vacant at the time of possession and requires the buyer to identify the unit if there are more than one. Further, some clarifications were made, including under paragraph 9B(2), where the term “window coverings” was changed to now explicitly include window hardware and rods.  

An entirely new section to assist sellers has been added in paragraph 11M.  The section “requires seller to give buyer known information about any solar system.”  This obligation can now be accomplished through using the new SOLAR form, discussed in more detail below. Paragraph 12B(3) was altered to make reviewing seller documents its own contingency, now articulated in paragraph 8D.

Paragraph 23 was edited adding language which now requires parties to notify escrow of any assignments.  Under the revision, the nominee will be treated the same as an assignee.  Finally, the “Agent Signature lines” in the Real Estate Broker Section (which denotes the email, phone, and address of each brokerage) was updated allowing brokers to designate an electronic delivery as the phone or email provided in the signature line or through providing a different one by way of checking the appropriate corresponding box. In making these changes, the C.A.R. noted that prior forms can still be used.

2. Buyer Representation and Broker Compensation Agreement (“BRBC”)

In the most significant addition, the C.A.R. replaced the Exclusive Buyer Representation Agreement form (“BRE”), the Non-Exclusive Buyer Representation form (“BRNE”), and the Not-for-Compensation Buyer Representation Agreement (“BRNN”) in their entirety with this new BRBC form.

Under the new consolidated form, there is no “not for compensation option.”  Additionally, paragraph 1 of the BRBC notes, the buyer representation period will only last for the number of days specified.  Under paragraph 4B(1), the form predisposes “non-exclusive representation” entitling the broker to compensation only when there was “‘Broker Involvement’” in the purchase of the property.

Next, paragraph 4B(2) creates an optional “exclusive representation[,]” which would entitle the broker to compensation upon the buyer’s purchase of property during representation “with or without” the broker’s help.  Paragraph 4C gives either the buyer or the broker the right to cancel the agreement.

One holdover from the BRE, BRNE, and BRNN worth mentioning is paragraph 4D(1).  This paragraph credits, against the buyer’s compensation obligation, any payments to the broker from the seller’s broker or from the seller.  Additionally, paragraph 4D(3) authorizes the broker to include a term asking for the seller to pay the buyer’s broker.  Finally, under paragraph 4(F), an obligation is imposed on the buyer’s broker to disclose any compensation the broker expects to receive from others on a particular property, and an obligation to disclose any compensation the broker actually ends up receiving.

3. Cancellation of Buyer Representation (“COBR”)

The COBR form is a new form where either the buyer or the broker can give notice of the cancellation of the representation agreement.  Functionally, there are two parts.  Part 1 provides notice of the cancellation, requiring a signature.  Additionally, Part 1 identifies any outstanding compensation due to the buyer’s broker.  Paragraph 3A relates back to the BRBC form discussed above and applies to any applicable property or to any property where broker involvement can be identified.  The form notes multiple valid forms of just compensation, including: “just expenses incurred (3B), broker receiving a referral fee (3C), broker getting paid from the seller (3D), or no compensation at all (3E)[.]”

4. Anticipated Broker Compensation Disclosure (“ABCD”)

Facilitating some of the changes encapsulated in the new BRBC form (which replaced the old BRE, BRNE, and BRNN forms), the ABCD form puts together the broker disclosures required under paragraph 4(F) of the BRBC form.  In Part 1 of the form, there is a new advisory to the buyer that any compensation to the buyer’s broker through the seller, or through the seller's broker, “may impact the price the seller will accept[.]”  Part 1 also notes the obligation of the buyer’s broker to reveal promised compensation on a property-by-property basis.  Part 3 of the form provides a portion where the broker discloses the actual compensation they received.

5. Buyer Transactional Advisory (“BTA”)

This is a new form intended to help buyers.  It may prove to be an excellent “Risk Management tool.”  The BTA is bundled with the new BRBC form, and it outlines the responsibilities and limits of agents and buyers respectively.  The purpose of this new form is to provide buyers with more information concerning the buyer-agent relationship.

6. Notice of Broker Involved Properties (“NBIP”)

Upon the termination of the representation, this form comes into play when there was a period of protection provided, “or within 5 days after either the buyer or broker cancels the BRBC.”

7. Seller’s Payment to Buyer’s Broker (“SPBB”)

This new form works in conjunction with the RPA form when paragraph 3G(3) (discussed in detail above) is checked.  The form identifies the precise amount of compensation the buyer is asking the seller to pay the buyer’s broker and does not allow for the broker to receive double payment.

8. Designated Electronic Delivery Address Amendment (“DEDA”)

This new form facilitates the RPA by providing a designated electronic address for delivery of documents when the fields were left blank in the RPA or to change addresses which were provided in the RPA.

9. Non-Contingent Offer Advisory (“NCOA”)

Here is an entirely new advisory which notifies a buyer of the risks of making offers without contingencies.  Further, to the end of fully informing buyers, the form provides a description of the contractual value of loan contingencies (paragraph 2A), appraisal contingencies (paragraph 2B), and investigation contingencies (paragraph 2C).  

10. Solar Advisory and Questionnaire (“SOLAR”)

This important new form has two parts.  In the first five paragraphs, there is an advisory discussing the most common types of solar panels and the most common agreements for owning or leasing them; how payments for solar set-ups commonly work; a discussion of principles of what gets transferred in a real estate purchase; and an advisory on the importance of reviewing all documents and inspecting the system before purchasing.  In the second part of the form, there are twenty questions for the seller to answer to the full extent of their knowledge as to each.  It is intended to satisfy a portion of the seller’s duties set forth in the RPA.

11. Cancellation of Contract, Disposition of Deposit and Cancellation of Escrow (“CC”)

The updates to this form render it incompatible with previous versions.  The revisions to this form only concern paragraph 1B, “Proposed Mutual Cancellation,” where new language sets a time for the recipient to respond and, if the timeline is not met, the proposal is then expired.

12. Seller Counter Offer (“SCO”)

Language was added to the SCO form in paragraph 1B, which clarifies that seller credits in the offer remain unchanged even if the purchase price changes.  Further, changes were made to paragraph 1C clarifying that the difference between the offered price and the appraisal contingency amount will remain the same, even in the event the purchase price changes.  Older versions of this form are incompatible with these new updates.

13. Seller Multiple Counter Offer (“SMCO”)

Here, the changes to the SMCO mirror those changes which were made to the SCO form discussed above.  Paragraph 1B was changed to clarify that the seller credits in the offer remain unchanged in the event of a purchase price change.  Similarly, paragraph 1C clarifies the difference between the offered price and appraisal contingency amount remains the same in the event of a purchase price change.  Much like the SCO form, the older versions of the SMCO are not compatible with these new updates.