Some significant changes are coming for California real estate agents on August 17, 2024 (or sooner depending on your MLS). These changes are due to new rules rolled out by the California Association of Realtors (CAR) as a result of the National Association of Realtors (NAR) commission lawsuit.
The introduction of revised forms, like updated Residential Listing Agreement (RLA) and Buyer Representation and Broker Compensation Agreement (BRBC) forms, are a big part of these changes. These revisions are designed to bring more transparency and fairness to the process. It’s crucial to complete these forms correctly. Incorrect completion can severely impact your real estate practice, potentially leading to fines and legal issues. So, let’s make sure we get it right. Let’s dive into what you need to know.
New Rules for Agents
Agents should be aware of the new protocols outlined by the changes in the CAR Forms:
- Residential Listing Agreement (RLA). The new RLA is now in a grid format. You’ll notice that key boxes like buyer’s compensation and dual agency are missing. If you want to include offers of compensation, you’ll need to amend the standard form.
- MLS Advisory Form. The MLS Advisory Form, which used to be part of the RLA, is now a separate form. It’s important to review this form with your clients, especially the concession box, to signal potential concessions to buyers.
- Updating Existing Listings. If you have listings signed before the new rules, you’ll need to update them to comply with the new regulations.
- Buyer Representation and Broker Compensation Agreement (BRBC). The BRBC is now mandatory for any broker activities. You’ll need to negotiate compensation with your buyers directly before you engage in broker activities.
- Commission Shifting. The G3 box allows the seller to pay the buyer’s broker commission. Alternatively, you can handle commissions as credits, though this may impact lending.
- Dual Agency. If you’re in a dual agency situation, you must disclose this to both buyers and sellers. Clear communication about compensation is crucial to avoid disputes. And dual agency can often lead to litigation.
Communication is key. Make sure you clearly explain the new rules and their implications to your clients. Consult with your brokers and legal advisors before making any amendments to forms.
These changes are significant, but we can navigate them successfully with the right approach. Remember, the goal is to ensure transparency and fairness in transactions. Let’s work together to make this transition as smooth as possible.