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A bill limiting homebuyer contracts to three months passed the state Legislature last week and is on its way to the governor’s desk.
If Gov. Gavin Newsom’s signs it, the measure would take effect Jan. 1, making California one of at least 22 states with laws requiring home shoppers to have a buyer-representation agreement with their agents.
“This (three-month) time limit was put in place to (ease) concerns that buyers … (can) be ‘stuck’ and unable to renegotiate or terminate the relationship (with a broker),” a report by the state Legislative Analyst’s Office said. “By adopting a somewhat short time period, this enables both buyer and broker to evaluate the other, and choose to continue the relationship … or not renew and find a better fit.”
See also: How to make a buyer’s real estate contract consumer friendly
Both houses of the Legislature approved Assembly Bill 2992 without opposition on Wednesday and Thursday, Aug. 28-29.
The bill conforms with a National Association of Realtors court settlement, which mandates that NAR members have buyer-agent agreements after Aug. 17.
Prior to Aug. 17, sellers were required to post offers to pay the buyer’s agent, and buyer-agent agreements were the exception. Just 41% of U.S. homebuyers had a written agreement with their agents as of 2023, NAR data shows.
Under the settlement, agents belonging to Realtor-affiliated multiple listing services, or an MLS, must have a buyer contract in hand before showing any homes to a client.
See also: How will new real estate rules work? Your questions answered
The new law extends the requirement to real estate license holders who don’t belong to an MLS. The bill requires buyers to have a contract before they can bid on a property.
Other California laws already require sellers to have contracts with their agents, with such agreements limited to 24 months on single-family homes, duplexes, triplexes and fourplexes, according to the California Association of Realtors.
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An attorney with the South Carolina Association of Realtors identified 18 states with mandatory buyer-agent agreement laws as of December. Three more states — Oregon, Indiana and New Jersey — adopted their own versions of such laws in the past year.
Under the California bill, buyer contracts will expire automatically after three months unless both sides agree in writing to extend it or the buyer is a corporation, LLC or partnership.
The contracts must spell out how much the real estate agent will get paid, what services the agent will provide, when compensation is due and terms for ending the contract.
Since the contracts will be with an agent’s employing broker, and not the agent, buyers can request to be paired with a different agent within that same brokerage if they’re unhappy, the state Legislative Analyst’s Office pointed out.
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Courtesy : https://www.pressenterprise.com/2024/09/03/homebuyer-contract-bill-heads-to-governors-desk/