The California Association of Realtors (CAR) is set to release new and revised forms in December, with drafts currently available on the CAR website. The forms are revised twice a year by the Standard Forms Advisory Committee, with the goal of improving statutory compliance (such as buyer-broker representation laws and FinCEN anti-money laundering rules), cleaner contract mechanics, and expanded disclosure requirements.
One of the key revisions is to the Buyer Representation & Broker Compensation (BRBC) form, which now includes default language capping the agreement at 90 days from the effective date or the specified termination date. The BRBC incorporates default language capping the agreement at 90 days from the effective date or the specified termination date, whichever comes first, to protect licensees from inadvertently invalidating an entire contract through a calculation error, as per California Civil Code § 1670.50.
The BRBC form also separates multiple representation disclosures into two dedicated forms: PRBS-B for buyers and PRBS-S for sellers. This change is designed to provide clearer disclosure requirements and avoid confusion.
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Residential Purchase Agreement Revisions
The Residential Purchase Agreement (RPA) has been revised to explicitly base appraisal shortfall formulas on the final agreed purchase price, rather than initial offer amounts. This change is intended to avoid ambiguity when multiple counter-offers adjust the purchase price.
The ‘Other Seller Credits/Payments’ section was broadened beyond standard closing costs and buyer-broker fees, providing dedicated fields to document items like temporary interest rate buydowns, HOA transfer/dues prepayments, or repair credits without custom contract language. The RPA incorporates required contractual covenants regarding U.S. Treasury Financial Crimes Enforcement Network (FinCEN) real estate transaction reporting requirements for non-financed, entity-owned residential transfers.
Revisions to the RPA also clarify deposit return rules, ensuring that a buyer’s earnest money deposit is returned when a buyer is actively acting within contractual rights to satisfy an open contingency, even if a Demand to Close Escrow (DCE) has been issued.
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Disclosures and Environmental Systems
The legacy statewide Septic, Well, and Rural Utilities (SWPI) form has been retired and replaced by two targeted forms: SWPI-C and SWPI-Q. The SWPI-C form allocates costs, repair liabilities, and inspection responsibilities, while the SWPI-Q form asks sellers detailed questions on maintenance logs, system permits, filtration, and water flow history.
The SPQ expanded document disclosure mandates, obligating sellers to disclose and provide past transaction paperwork, historical inspection reports, repair estimates, and boundary disputes known from prior ownership. In accordance with California Civil Code § 1102.6i, statutory advisory language was embedded directly into purchase agreements advising buyers to seek specialized inspections of residential electrical panels and systems.
California Realtors can review the draft forms on the CAR website and provide comments and suggestions until 12 pm, Thursday, October 11. Questions can be directed to Cecilia Matias, REBS Coordinator, at [email protected].
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