New Legislation Results in New Disclosures for Real Estate Transactions
Effective January 1, 2019, Assembly Bill 1289 triggered new laws impacting real estate disclosure requirements. Real estate agencies should update their disclosure forms to reflect the new laws, if they haven’t already done so.
Language has shifted. Terms like “selling agent” and “listing agent” are now obsolete, and should be replaced with “buyer’s agent” and “seller’s agent” for greater clarity. The term, “buyer’s agent,” has also been simplified, to simply mean any agent who represents a buyer in a real estate transaction. The new language is also included in the Agency Law Disclosure. The California Association of Realtors (CAR) Forms are being updated to reflect this change.
A new section was added to Seller and Buyer Statutory Responsibilities under the Civil Code. The new section reads:
“Either the purchase agreement or a separate document will contain a confirmation of which agent is representing you and whether that agent is representing you exclusively in the transaction or acting as a dual agent. Please pay attention to that confirmation to make sure it accurately reflects your understanding of your agent’s role. The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect his or her own interests. You should carefully read all agreements to assure that they adequately express your understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional. If you are a Buyer, you have the duty to exercise reasonable care to protect yourself, including as to those facts about the property which are known to you or within your diligent attention and observation. Both Sellers and Buyers should strongly consider obtaining tax advice from a competent professional because the federal and state tax consequences of a transaction can be complex and subject to change. Throughout your real property transaction you may receive more than one disclosure form, depending upon the number of agents assisting in the transaction. The law requires each agent with whom you have more than a casual relationship to present you with this disclosure form. You should read its contents each time it is presented to you, considering the relationship between you and the real estate agent in your specific transaction. [Civil Code §2079.16]”
Who gives what, to whom? The seller’s agent must provide a copy of the Disclosure Regarding Agency Relationship to the seller before entering into a listing agreement. The buyer’s agent is required to give the disclosure to the buyer when entering into a buyer representation agreement or when submitting an offer on behalf of the buyer. Both buyer’s agents and seller’s agents must obtain signed acknowledgement that buyer and seller have received the disclosure.
Simplified dual agency prohibitions. Previously complicated dual agency provisions are now simplified, with dual agents prohibited from disclosing any confidential information about buyer or seller without their written consent. Agents, be sure to read the agency language carefully.
Changes to the Natural Hazard Disclosure Statement. Language has been updated, changing “transferor” to “seller” and “transferor’s agent” to “seller’s agent”. “Transferees” has been updated to “buyers”.
Requirements for late disclosures. When a disclosure, or a significant change to a disclosure, is made after completion of the purchase agreement, the homebuyer is granted a period of time to terminate the contract. The time periods are granted as following:
- Within three days, if the dilatory disclosure was provided in person
- Within five days, if the dilatory disclosure was provided by mail, or if buyer and seller agreed to conduct the transaction electronically
Notification of sex offender registry. The notice of sex offender registry now must be delivered for the lease of a multi-family property of more than four units (previously excluded from the requirement).
For more information on AB 1289 and changes to real estate disclosures, brokers and agents please consult the new laws section on the CAR website, or contact our real estate attorneys. We can answer questions about the new laws and assist your agency in updating forms when necessary.