This is the third episode in our new video series depicting the seismic shift in the representation of buyers in 2025, cementing long-standing public policy.

This series will dramatize:

  • the origin of the “same-percentage, same-split” industry custom being unwound by recent legislation;
  • the contents of the newly-mandated buyer representation agreement;
  • critical rules surrounding retainer periods, and how buyer representation is extended or modified; and
  • your practical use of the buyer representation forms as depicted through various sample transactions and scenarios.

Why this episode matters to your practice: The use by a buyer broker of a signed representation agreement entered into ASAP with every consumer seeking to acquire an interest in any type of real estate will be mandatory in 2025 — or no fee is due the buyer broker.

The paradigm shift in representation

Legislation effective January 1, 2025 requires a buyer agent — not the seller agent unless acting as a dual agent — to enter into a written representation agreement when their buyer-client seeks their assistance to acquire an interest in residential or commercial real estate. [Calif. Civil Code §1670.50(a)]

The employment agreement provides upfront disclosure of the brokerage fee to be earned by the buyer broker and agent for acquisition services rendered. Further, the writing establishes the buyer will pay the fee, unless pushed to the seller for payment. In either circumstance, the fees are included in the total purchase price the buyer is to pay to acquire property. [See RPI Forms 103.1 and 103.2]

The written buyer representation agreement, also known as a BRA, is entered into by the buyer agent:

  • as soon as practicable (ASAP) after determining the agent will represent the prospective buyer-client; and
  • always before the buyer signs an offer the agent will submit to acquire an interest in a property. [Calif. Civil Code §1670.50(a)]

This buyer-agent conduct with their buyer, in and of itself, is not a new or novel employment arrangement. Rather, this codification is a welcome advancement on a well-worn and storied theme.

For decades prior to the settlement rattling the trade union’s “gold standard,” a buyer listing agreement was used by a buyer to employ a broker and their agents. The agent then located qualified properties for the buyer to purchase, exchange or option, as authorized under an exclusive right-to-buy listing.

As with an exclusive right-to-sell listing, the exclusive right-to-buy variation contained provisions for a brokerage fee earned and owed as agreed to with the buyer, not the seller or the seller agent, as they are the buyer’s adversaries. The buyer broker fee is paid to the broker at the close of escrow from funds for payment of the purchase price, when the buyer acquires property described in the buyer listing (representation) agreement.

Editor’s note — RPI (Realty Publications, Inc.) has published an exclusive right-to-buy listing agreement since 1981, induced by the California case decision of People v. NAR. This has been replaced with the buyer representation series of forms. [People v. National Association of Realtors (1981) 120 CA3d 459; see RPI Forms 103.1 and 103.2]

Related video:

Price Fixing and Association Membership

What has materially changed in the past several decades?

The new statutory title is Buyer-Broker Representation Agreement, or more simply, a Buyer Representation Agreement. It is fundamentally a new name for a long-established employment agreement. [Calif. Civil Code §1670.50(a)]

The label “representation” was added in the wake of the recent NAR antitrust case settlement, codifying some of the new nomenclature to replace the name “Buyer Listing Agreement.”

The operative components of the representation agreement entered into by a buyer and a buyer broker, as negotiated by the broker agent, include the same essential provisions:

  • a description of the real estate services to be rendered by the buyer agent;
  • the fee to be paid to the broker;
  • when the fee is to be paid; and
  • the conditions for termination of the employment. [CC §1670.50(b)]

The buyer representation agreement also contains the same boilerplate notice already required in all employment contracts a broker uses to establish their right to a fee, such as any representation agreement:

NOTICE: The amount or rate of real estate fees is not fixed by law. They are set by each Broker individually and may be negotiable between Client and Broker.

Written documentation of the client’s obligation to pay a fee has long been legislated and judicially mandated. The writing is a requisite to the right to enforce collection of a broker fee on a contemplated purchase transaction entered into by the buyer-client.

However, new legislation was needed to force trade union members to comply. [CC §1670.50(b)]

In the next episode, we’ll cover additional critical aspects concerning your use of the new buyer representation forms in 2025 and beyond. [See RPI Forms 103.1 and 103.2]