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:

CAR’s sleight of hand – the stealth meaning of “free”

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.

 

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!