Many real estate licensees erroneously believe they must use forms published by a trade union, such as the California Association of Realtors (CAR). But remember, the Bureau of Real Estate (BRE) warns licensees to fulfill your fiduciary duty to your sellers by presenting all offers received, regardless of the form used to write up the offer.
It is a reportable offense for a seller’s agent to fail to submit all offers, a tactic buyer’s agents have learned to use. As succinctly stated in the real estate digest, Miller and Starr Third Edition, “The [seller’s] broker must disclose to his principal-seller all offers that have been made by any person, whether the offer is only oral or in writing, and even though the seller has accepted another offer.” [Miller and Starr §3:27]
Thus, offers do not need to be written on so-called “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 our inventive and open marketplace. Not so in more restrictive states. Other brokers, associations, and the multiple listing services may not and do not require a broker to use a particular form. A broker may limit his employed agents to the use of a particular form when preparing an offer – but never in the submission of offers received from other brokers.
Unlike the forms improperly monopolizing the industry today, first tuesday forms are deliberately engineered to be simple. It is a difficult task to eliminate weight. first tuesday forms eliminate the redundant language which clutters other forms. The result is a concise, complete presentation, allowing you to focus on your sales, rather than wade through jargon. Less has become more, as is better for everyone.
Better yet, first tuesday’s Purchase Agreement (One-to-Four Residential Units – Conventional and Carryback Financing) was drafted to provide maximum loss reduction protection, as well as fee protection, for brokers and their agents. As a matter of good policy, our purchase agreement does not contain clauses which increase the risk of litigation or work against the best interests of the buyer, seller, agent and broker.
Also, since the buyer is making the offer to the seller, first tuesday’s purchase agreement is designed with the buyer in mind. Thus, the form does not automatically favor the seller in every provision as do the seller-biased “standard” forms.
Provisions deliberately excluded from the first tuesday forms as risk mitigation policy include:
- the attorney fee provision, which promotes litigation and inhibits resolution;
- the time-essence clause, since future performance (closing) dates are estimates by the broker and his agents of the time needed to close and are improperly used by sellers in rising markets to obstruct or cancel the transaction before the buyer or broker can comply with the terms of the contract;
- the liquidated damages provision, since it creates wrongful expectations of windfall profits for sellers, and is unenforceable; and
- the arbitration provision, since arbitration decisions are final and unappealable, without any judicial oversight to assure the arbitrator’s award will be fair or correct.
first tuesday’s purchase agreement includes a mandatory mediation provision to mitigate the risk of a legal battle. Mediation of any dispute must be undertaken as a precursor to filing an action, be it arbitration or litigation. Mediation is a quick process and is the most cost effective method of dispute resolution society has developed.
When faced with an uninformed seller’s agent who refuses to review and submit an offer prepared on non-trade union forms, you need to insist that a counteroffer or formal rejection of the offer is signed by the seller and returned. Recalcitrant agents need only be reminded that the avuncular nudge of the BRE is but a phone call away.