Many real estate licensees erroneously believe they are required to use forms published by a trade union, such as the California Association of Realtors (CAR®). But remember, the Department of Real Estate (DRE) consistently 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.

Related article:

Bureau of Real Estate: Real Estate Bulletin, Fall 2001 – Being an agent means never having to say you’re sorry

It is a reportable offense for a seller’s agent to fail to submit all offers to the sellers they are duty bound to represent, a tactic which frustrates the ability of buyer’s agents to perform. As succinctly stated in the real estate digest, Miller and Starr Fourth 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 principal has accepted another offer [Miller and Starr §3:40]

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 California’s open marketplace. This is not the case 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 their 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, RPI forms are deliberately engineered to be simple. It is a difficult task to eliminate weight and surplus language.

RPI forms eliminate the redundant verbiage which clutters other forms. The result is a concise, complete presentation, allowing you to focus on your sales, rather than wade through the jargon. Less has become more, as is better for everyone.

Better yet, RPI’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. [See RPI Form 150]

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, RPI’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. [See RPI e-book Real Estate Principles Chapter 27]


Related Video: Analyzing the Purchase Agreement

Click here for more information on this topic.

Provisions deliberately excluded from the RPI 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 their 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 often 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.

RPI’s purchase agreement includes a mandatory mediation provision to mitigate the risk of a legal battle. Mediation of any dispute is to 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.

Related reading:

Industry leaders are cutting arbitration provisions – and they aren’t needed in real estate, either

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 only need to be reminded that the avuncular nudge of the DRE is but a phone call away.

Related articles:

Form-of-the-Week: Purchase Agreement and Natural Hazard Disclosure Statement – Forms 150 and 314

Arbitration law updates leave much desired

Want to learn more about this topic? Click the image below to download the RPI book cited in this article.






This article was originally posted [May, 2013 of Brokerage Reminder: first tuesday’s Purchase Agreement; fair and unbiased for all to use], and has been updated.