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Question: I am a new RPI forms user and noticed the forms published on your site don’t include all the forms I’ve used in the past through the California Association of Realtors (CAR)®. When completing a residential home purchase, which real estate forms are required by the state, and which CAR forms are not needed?

Answer: There are several forms published by the trade union that are superfluous, and not required to be used.

Forms required by the state

For real estate transactions conveying fee ownership of a property, the primary document a buyer’s agent uses to negotiate their buyer’s acquisition of a property is a purchase agreement form. [See RPI Form 150-159]

Three basic categories of purchase agreements exist to formalize real estate transactions. The categories are influenced primarily by legislation and court decisions addressing the handling by the seller’s agent of the disclosures and due diligence investigations required to market properties.

The three categories of purchase agreements are for:

  • one-to-four unit residential property acquisitions [See RPI Form 150 – 153 and 155 – 157];
  • other than one-to-four unit residential property acquisitions, such as for income-producing properties and owner-occupied business/farming properties [See RPI Form 154158-1 and 159]; and
  • land acquisitions. [See RPI Form 158]

Related video:

Purchase Agreement Types and Variations

The various conventional financing arrangements and conditions a prudent buyer considers when making an offer to purchase are tightly worded for easy selection.

Regardless of the variation, all RPI purchase agreements are designed as comprehensive “boilerplate” contracts. Each purchase agreement functions as a checklist of all forms and disclosures that are mandated to be part of the transaction, and contains all the provisions the buyer and their agent are to consider when preparing an offer.

For example, consider a residential one-to-four-unit home purchased with conventional financing.

The seller completes and delivers to a prospective buyer a statutory form called a Transfer Disclosure Statement (TDS), more generically called a Condition of Property Disclosure Statement. [Calif. Civil Code §§1102(a), 1102.3; see RPI Form 304]

The seller’s use of the TDS form is mandated. The seller is required to prepare it and make all entries with honesty and in good faith, whether or not a seller’s agent is retained to review its content. [CC §1102.7; See RPI Form 150 §11.2; RPI Form 304]

When the home under consideration was built before 1960, the seller also furnishes the buyer a Residential Earthquake Hazards Report, identifying any potential weaknesses to earthquakes the property may have. [See RPI Form 150 §11.7; RPI Form 315]

Relatedly, when the home is located within an earthquake fault zone, the seller needs to disclose this fact on the NHDS. Further, when the seller provides the Homeowner’s Guide to Earthquake Safety, they are not required to provide any further information to the buyer regarding earthquake hazards. Delivery of this booklet is required for homes built prior to 1960, and for homes with wood-frame floors or roofs built prior to 1975. [See RPI Form 150 §11.6; RPI Form 316-1]

Further, sellers of homes built before 1978 need to include a Lead-Based Paint Disclosure. [United States Code §4852d; See RPI Form 150 §11.7; RPI Form 313]

The seller also provides the Natural Hazard Disclosure Statement (NHDS) on the property from a local agency or a vendor of NHD reports, paid for by the seller, and reviewed and signed by the seller and the seller’s agent. [See RPI Form 150 §11.5; RPI Form 314]

Related video:

Natural Hazard Disclosures

Similarly, the buyer’s agent uses the RPI purchase agreement to prepare and submit the buyer’s written offer to purchase a one-to-four-unit residential property to a seller and seller’s agent. [See RPI Form 150]

The Agency Law Disclosure

is used by agents as an attachment when preparing a listing agreement, purchase agreement or a counteroffer on the sale or exchange of residential property, commercial property or mobilehomes, to comply with agency disclosure law controlling the conduct of real estate licensees when in agency relationships. [Calif. Civil Code §§2079 et seq.; See RPI Form 150 §15.3; RPI Form 305]

On acceptance, the purchase agreement becomes a binding written contract between the buyer and seller. To be enforceable, the price and terms for performance need to be clearly worded, concise and complete to prevent misunderstandings.

Lastly, local cities and counties may require their own disclosures beyond those required at the state or federal level.

The superfluous forms

CAR publishes real estate forms. However, many practicing licensees are unaware that several of these forms are not mandated by the state and instead are only provided as a matter of trade union policy.

For example, some forms that have become “standardized” by CAR but are not legally mandated, nor are they published by RPI. These vigilante forms include CAR’s Agent Visual Inspection Disclosure (AVID), which is redundant and already covered in mandatory disclosures. Another example is CAR’s Property Entry Advisory Declaration (PEAD), which is not mandated and covers information best discussed in verbal discussions. Thus, skipping these proprietary forms in lieu of a single, streamlined purchase agreement is simpler and more effective. [See RPI Form 150]

Further, CAR includes several provisions that RPI deliberately excludes from its forms as risk mitigation policy, including CAR’s:

  • arbitration provision, as arbitration decisions are final and unappealable;
  • attorney fee provision, which encourages ongoing disputes;
  • 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
  • unenforceable liquidated damages provision, which creates expectations of windfall profits.

Related video:

The RPI Purchase Agreement – Better Protection of Your Fee

RPI Forms are free to download and are 100% legal to use in California. Further, the Department of Real Estate (DRE) requires agents to present all legitimate offers to their clients, no matter whether the form publisher is RPI, CAR, another independent publisher – or even written up on a cocktail napkin. Agents who fail to submit all offers commit a reportable offense.

View and download RPI Forms here:

Realty Publications, Inc. – RPI Forms Download

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