CAR’s laundry – dirty forms
The California Association of Realtors (CAR) doesn’t play well with others, requiring its members to use its captive proprietary software to manage any use of their forms. But does this arbitrary limitation over the use of filler software really matter when superior alternative forms are openly available?
Crossing the Rubicon
Inman News recently reported on the California Association of Realtors (CAR)’s public scuffle over how agents may (as opposed to can) use their forms.
CAR has demanded dotloop, an online forms management software provider, remove CAR forms from the dotloop website. CAR seeks to lock its members into exclusively using zipLogix software to prepare forms, a company run by CAR’s for-profit subsidiary Real Estate Business Services, Inc. (REBS). Dotloop provides a more powerful, tech-friendly presentation of CAR real estate forms than is offered by zipLogix.
The Inman article poses a nuanced question: is CAR in the business of promoting the interests of its members, or selling annual subscriptions to its software?
However, this leapfrogs the weightier primary issue: which form content is best for Californians?
The software suite surrounding the use of a form is of secondary importance to the actual form itself. Before crossing the Rubicon to battle filler programs, agents need to do a bit of due diligence and first consider which form they ought to use.
Why get distracted by the packaging when the underlying product is rotten?
Can’t see the forest for the trees
As all seasoned real estate brokers know, it’s about content first, interface second. Thus, before launching into a heated debate about proprietary software and antitrust violations, one must decide which forms are worth using in the first place.
The Inman article assumes that only one monopolized “standard” form is used in California. This is not the case, but it’s a common misconception.
Many real estate licensees erroneously believe they must use forms published by a trade union, such as CAR. Some, like the author of the Inman article, presume no viable alternative to CAR forms exist. But remember, the Bureau of Real Estate (BRE) warns licensees to fulfill their fiduciary duty to their sellers by presenting all offers received – regardless of the form used to write up the offer, be it a cocktail napkin or non-CAR published form. [BRE Real Estate Bulletin – Fall 2001]
Thus, CAR’s forms are not the only choice. A broker may use any form they choose. Other brokers, associations, and the multiple listing service (MLS) cannot and do not require a broker to use a particular form. The California courts have warned associations to behave without violating antitrust laws.
Further, offers do not need to be written on union published “standard” forms to be valid. As a matter of fact, there is no standard form for use in California. You may use any form you choose in California’s vibrant and wide-open real estate marketplace. Thus, before getting hung up on the technology, first determine which publisher’s forms are best for you.
Editor’s note – Ironically, CAR has recently adopted the expression of “gold standard” to describe their forms. This naming convention may have been clever 100 years ago on CAR’s founding, but remember folks, we went off the “gold standard” in 1933.
For over thirty years, first tuesday has been providing the real estate industry with the highest standard of over 400+ real estate forms. first tuesday forms are designed specifically for use by all California licensees. Better yet, first tuesday forms reflect the spirit of our laws and practice, and are engineered to be intuitive and concise. If CAR forms are the “gold standard,” first tuesday forms are 21st century “standard medium of exchange.”
As a matter of good policy, first tuesday forms are drafted to provide maximum loss reduction protection, as well as across the board fee protection, for buyer’s brokers and their agents.
Related reading:
first tuesday Purchase Agreement; fair and unbiased for all to use
Provisions deliberately excluded from the first tuesday forms as risk mitigation policy include:
- the arbitration provision, as arbitration decisions are final and unappealable;
- the attorney fee provision, which encourages ongoing disputes;
- the time-essence clause, which is improperly used by sellers in rising markets to obstruct the transaction before the buyer or broker can comply with the terms of the contract; and
- the unenforceable liquidated damages provision, which creates expectations of windfall profits.
Thus, no need arises to quibble about the shortcomings of CAR’s software when superior alternatives are readily available.
CAR is about membership fees, not members
CAR makes the repeated claim that their forms are “free” (note the intentionally ironic use of quotations). If the forms are free, why is CAR so riled up about smaller, independent entities like dotloop allowing CAR members to use its free forms through dotloop’s filler platform? No, CAR isn’t the beneficent Robin Hood its officers so brazenly make it out to be.
“Free,” in CAR’s vernacular comes with a very heavy caveat: forms are “free” to paying CAR members. Membership dues to CAR currently run $184 – annually. Even for those who are mathematically challenged, $184 is in no way “free.”
And if you’re not a member and want to access CAR’s scant library of forms, the cost of entry is $699.
Related reading:
With these excessive costs associated with accessing forms, this begs the question: if forms were extracted from CAR’s membership, just what are those hefty membership fees buying? Once this conceptual curtain has been drawn back, the truth becomes evident: mostly just platitudes.
Why is CAR so intent on forms? Since 2002, forms have been their primary product for capturing revenue. The original Inman article missed a bit of critical history. Robert Butters, the Florida attorney specializing in antitrust law interviewed for the Inman article, states that CAR’s current actions may leave them exposed to an antitrust suit.
Perhaps if Butters was in California, he would have a more intimate knowledge of CAR’s potential antitrust tendencies. CAR’s current legal gesticulations are only a pittance compared to their previous forays into antitrust territory. In 2000, CAR bundled access to forms, a previously available good which was separately sold on the open market, with their membership. The purpose was to put competitors out of business, as bundling is intended to do.
Similarly, CAR puts emphasis on coupling membership of the lucrative and controlled Multiple Listing Service (MLS) in order to participate in real estate transactions in California, which is another farce. By definition, agency, whatever the type, is created either by contract or by the conduct of each broker and their agents when interacting with a buyer or seller, and not by trade union memberships. [Calif. Civil Code §2307]
Why is the mighty CAR so afraid of little, innovative startups? In a word: piracy. By allowing their sacrosanct downloadable forms to be used through a different program, such as dotloop, CAR is frightened their materials will strip them of their nurtured ecosystem. Simply, they are afraid their “free” forms will truly become free.
One can practically hear the quiver in CAR’s Newsstand response to entities like dotloop. If one can wade through the hyperbole about “gold standard forms,” the legal merit of their forms and the integrity of content, the fear becomes readily apparent.
CAR also launched a counterattack in social media, referred to collectively as Farcebook and TwitFace, continually reiterating its need to “protect” its forms.
Why protect C.A.R. forms? Get the facts: http://t.co/bv5yNCYutq
— CA ASSN OF REALTORS® (@CAREALTORS) June 20, 2013
CAR’s transparent motivations in all of this are easy to divine. Joel Singer, CAR’s Chief Executive Officer (CEO), is also president and CEO of zipLogix. This points to an innate conflict of interest, accounting for CAR’s (a self-proclaimed non-profit) bearish protection of its “free” forms.
Editor’s note – Though the use of zipLogix is cemented most firmly in California, zipLogix’s home is on more foreign soil – it is a registered Michigan LLC. Click here for their filing.
In truth, forms really should be free – almost – and widely available as a universal public service. Ownership of real estate, particularly a home, is one of our society’s strongest institutions.
A closed ecosystem prevents evolution
CAR, the largest state association in the nation, creates an insular, inbred ecosystem in which only its members participate, doing as told from on high. It is a closed system, fortified against outside thought.
This has always been bad for California real estate, but the challenges are only now surfacing. It limits agent independence, and locks users of CAR forms into annually maintaining their costly affiliation. CAR’s zipLogix’s cloud-based system is essentially a cage, and one which is specific to California. Approximately 40 associations for other states have voluntarily added their form libraries to dotloop’s site. The most recently associations joining up were New Mexico and Nebraska, as reported in an Inman follow-up. Neither states are exactly the bastions of IT liberality that California is, home of Silicon Valley.
first tuesday promotes an open system, keeping our forms in a universal PDF format. Users are not required to keep their important documents offsite (and out of their hands/files) in the clouds. first tuesday forms are fully compatible with third-party compliance management and document storage services such as dotloop, leaving agents and brokers free to use whatever platform they deem most suitable – including ours.
Just as agents and brokers are free to use whichever forms they use in their professional practice, they should be equally free to use the management software most effective in preparing them without fear of a pirating rebuke.
Innovation and efficient practice needs freedom to grow, not limited to parameters set by wary monopolists.
It’s rare the CAR airs its dirty laundry so publically, and is likely only letting this breaking story spread since it feels absolutely righteous in its position. As this breaking story develops, first tuesday will be sure to let you know. Inman indicates they will publish an additional follow-up article this week on these issues.
A kindly reminder, California: before you bow to the bully, remember you have a choice.
CAR’s decision to protect its products at the expense of its members reveals its profit-taking motivations. Tell us what you think in the comments below!
I’ve bought Fred Crane’s first tuesday forms since they first came out and use them all the time, even editing slightly for property purchases in Arizona. I would not agree to binding arbitration at gunpoint and that’s what I tell my clients — don’t do it. Sure it’s quick and cheap but so is a gullotine (sp?); and an arbitrator can go against you just because you drive the wrog color of car even though you’d win in court. They don’t have to follow the law and they don’t have to follow the facts. The first tuesday forms have always been well written by folks in the trenches and extremely economical to purchase.
I like FT forms. They provide me with essentially all that I need to do my business. I also like the fact that FT forms have many “Title” forms, and many forms that are not included in the CAR library. That said, even the E&O insurers prefer that we use CAR forms for our contract work, since they are familiar with them. As far as the forms being copyrighted, that’s a valid point, but CAR could choose to license them to sites such as dotloop.
As far as storage is concerned, our transactions are stored multiple places. Zipform simply provides a convenient place to keep them. Interestingly, our MLS/Board now supports and encourages the use of Google–apps, documents, and drive. With the storage they provide, one could store many years of transactions outside Zipform. And there is no law against downloading / uploading all your completed forms, and storing the material on a local hard drive, network drive, thumb drive, cd, or some other personal and private storage system.
I believe that BOTH sets of forms (CAR’s and FT’s) are useful, and provide agents, brokers, and individuals with excellent materials to conduct their real estate ventures.
I do use FT forms quite often, but usually when there is no corresponding CAR form, or when I need different wording than CAR provides.
–Steve Bradley
We just experienced the thievery of CAR. I elected to retire from the Pasadena Foothill Board of Realtors at age 75. I forgot to tell our A/P clerk of my decision so she paid for another year of CAR forms. The next day we were locked out of the system and they refused to refund the $99.00 payment as it is against their policy. CAR is located out of our area so I can’t sue them in Small Claims Court but there are some things that shouldn’t go unanswered.
Zack, you make a great point. Any activity of an agent that interferes with the client’s best interest should be condemned. Are we really to believe that the seller, without broker influence, demands the use of CAR forms? Sure, just like they demand the use of escrow and title companies they never heard of.
If I come in with an offer on a paper bag, that listing agent best not refuse to present it or I will be right down at the the Commissioner’s office. In fact, oral offers must be presented as well. Those that think oral offers don’t need to be presented because of the Statute of Frauds best learn what that statute really says. Refusing to present an oral offer can cost you your license and get you sued. Then there are those that think putting provisions in the listing that say “don’t present this or that” will protect them. Think again. Your own listing provision is contrary to public policy because of the result it produces (or fails to produce).
Linda, you need to consider one thing in this corrupt and racketeered business environment that our government has condoned. Making sure that the forms change weekly, in combination with total exclusive control of their distribution, creates a CAR racket I don’t want to support. How about the IRS doing this with tax forms?
Many agents don’t know how to read and understand a contract – and they don’t want to learn. This is the real reason why many want CAR to standardize the whole mess for them. If you can’t take the heat ………..
The CAR forms are boiler plate forms that only protect the realtor; can not understand why people use them except that they have been introduced to them and are afraid to try something new and easier for them. Glad that the DRE is being taken away from the control of CAR; that should have been done years ago.
They own it. Their work product. They have a right to control its use. That is the law in our country and frankly fair. Nothing restricts someone else’s ability to take their time and energy and come up with their own forms. In fact, others have.
I pay a pretty penny to have access to copyrighted forms, it would be upsetting if others could get the same access for free.
Let’s be accurate: Copyrighted material is protected. CAR forms are copyrighted and they cannot legally be published, on the Internet or elsewhere, by anyone without the copyright holder’s (CAR’s) permission. So, politics aside, CAR or any holder of the copyright on printed material has the right to restrict or control use of its materials.
Second, as to CAR’s forms not working to the advantage of the consumer: Use the Addendum to the purchase agreement, that’s what it’s for. In theory, you could use the Addendum to void the entire Residential Purchase Agreement and write your own contract.
As to agents requiring use of CAR forms, that practice offers, at a minimum, boilerplate protections to both parties and avoids the “offer” written on a cocktail napkin, fraud and claims of “nobody told me” resulting from details left out of self-generated “contracts.”
At some point, you have to stop whining about what any form doesn’t do and use what it does do. As I said, CAR provides us addenda for a reason. The next forms provider that comes along will have just as many, or more, nay-sayers.
The biggest problem is that many agencies state in a property listing that a CAR form must be used to submit an offer to a seller. In many cases this policy actually harms the seller, especially when more complex offers or unique financing situations may occur.
Its my belief that the State of CA should protect its sellers – many sellers are unaware that their agents stipulate that CAR forms should be used for offers.
Therefore, when a listing agent states ‘CAR forms only’ they are restricting the range of offers and unique terms that a buyer may offer a seller, thereby harming the seller.
New legislation should be introduced in CA that prohibits a seller from restricting the format of an offer. All offers should be presented to a seller without prejudice, whether on a CAR form, a napkin or whatever.
CAR Forms should not have any monopoly or advantage over offers submitted on a napkin or even a piece of toilet paper.
Unless a seller stipulates that a CAR form must be used to submit an offer,
No one stocks the forms anymore because they are changing daily. For the association to stock every form and toss each as it is improved would be a mega expense and a legal liability. However, all forms were available to the public when we did sell the printed form. Ya know, writing your own sales contract is just plain stupid. I think it is as stupid as getting trust documents on a CD at Office Depot and doing your own legal work. All smart rich people use attorneys and experienced Realtors to do their contracts. Zip forms should probably have a cost associated with access. Members of Associations are esentially paying for the service in their dues. If CAR is so worthless, why go to buy forms there at all in the first place?
A few days ago I went into the local south orange county board of Realtors to purchase a few CAR forms. I found they only had 2 of five forms I requested. I was told in order to access these forms I would have to join CAR and go zip forms online as the local board was no longer ordering the forms. I was told they are trying to go paperless. The alternative was to buy the expensive software. Around $800 to $1000 I think. It appears the CAR has no interest in servicing real estate agents or supplying its forms to other than it’s members. I was a REALTOR for many years and found little use for joining . The only service I ever used was the legal hot line. The advice I received was completely incorrect and contrary to California statues. Young attorney’s right out of school . NO CAR for me.
CAR Forms have become too complicated.
The CAR situation is exemplary of the overwhelming proliferation of America’s laws, rules and regulations.
Without that proliferation of restraints, beloved old Uncle Sam will be caught in a web of our own legislating.
CAR forms are really terrible and they should be dropped by CAR in favor of far better, useful forms such as First Tuesday!
I started in Real Estate in 1958 and am still going strong with First Tuesday forms.
Byron D. Maynard