The Revised RPA and New Forms — The Top Five Questions from the Legal Live Webinar
The revised RPA and new forms for December 2022 have been released. 1400 Members attended our Legal Live Webinar on December 13th. You can listen to a recording of the December New & Revised Forms Legal Live Webinar at the link.
During the webinar, members had the opportunity to write in their questions using the chat feature. Here are the top five questions that we received.
Question 1: “The RPA now includes paragraph 3G(3) which allows the buyer to request that the seller pay the buyer’s broker’s commission. Is this required to be completed?”
Answer: No, it is optional. It is similar to a buyer asking the seller to pay the buyer’s closing costs, or points to pay down the interest rate on a buyer’s loan. In order for a buyer to even consider making this request, the buyer must have already entered into a written agreement to pay their own broker. Even then, it would still be optional.
Does this allow the buyer’s broker to receive a double commission, that is, to receive payment through the MLS ‘s offer of compensation and also from the seller? No, the buyer’s broker is not entitled to double-payment if the seller’s broker has already agreed to pay the buyer’s broker through the MLS.
To make the request for the seller to pay the buyer’s broker’s commission, the buyer will check box 3G(3) and attach a new form SPBB which stands for “Seller Payment to Buyer’s Broker.”
Question 2: The TOPA form (Tenant Occupancy Property Addendum) is now required under item 3M(3) to be attached to the RPA when “anyone other than seller” resides in the property. Does that include a spouse?
Answer: It will include anyone who is not on title, which could mean a spouse. So, if a spouse of the seller is not on title, then the TOPA must be attached to the purchase agreement. Essentially, when any person — even a relative — occupies the property and is not on title, then TOPA form is required.
What about minor children? No. Minor children occupying the property will not necessitate attaching a TOPA form.
Question 3: There is new “appraisal gap” language in the counter-offer forms (the BCO and the SCO). When does that come into play and what does it mean?
Answer: It only comes into play if a lower value had been written into item 3L(2) of the RPA (which lowers the price at which the appraisal contingency may be exercised). What this means is that the appraisal gap will be held constant no matter what purchase price is ultimately agreed to.
For example, if the offer price is $1 million dollars but the buyer wrote $980,000.00 into 3L(2), then the appraisal gap is $20,000. That $20,000 appraisal gap will not change even if the purchase price is subsequently increased or decreased by the counter offers.
Question 4: There is a new ABCD form (“Anticipated Broker Compensation Disclosure”). What is its purpose? Is this now a required disclosure that must be given in all transactions?
Answer: The purpose of this form is to disclose to the buyer the amount of the buyer’s broker’s commission. But the form is only required if the client has signed a Buyer Representation and Compensation Agreement (Form “BRBCA”). Other than that, it is not legally or contractually required. However, even if no BRBCA has been signed, it is still a recommended form since it is a good business practice to keep a buyer informed of the amount of the commission that a buyer’s broker is earning.
Question 5: The Vacation Rental Agreement (VRA), the vacation listing form (VRL), and the business opportunity forms (BPA, BDS and BLA) have all been removed from the C.A.R. forms library. Why?
Answer: The vacation rental forms were removed for lack of use. But it also appeared that they were often being used incorrectly for rentals that exceeded one month, which would create liability for the agent and the landlord.
The business opportunity forms were discontinued primarily for lack of use. The limited usage by our membership could no longer justify the staff time needed to keep the forms current.
Bonus Question: In the RPA, the definition of Legal Holiday now references the full list of legal holidays in the Civil and Government Codes. What difference will this make in figuring out what counts as a holiday?
Answer: The difference is two-fold. First, it will be much easier to determine exactly what days are counted as holidays. Second, some holidays, which are not necessarily observed by banks, lenders or recording or other government offices, will now be counted as holidays under the RPA.
These holidays will include Genocide Remembrance Day (4/24); Lunar New Year (usually the second new moon following winter solstice); Admissions Day (9/9); Native American Day (the fourth Friday in September); and Columbus Day (the second Monday in October.).