The California association said the Consumer Federation of America’s assessment was “misguided” and that its forms fully met the requirements.
The California Association of Realtors has been under intense scrutiny in recent days. The organization announced last week that the Department of Justice had opened a “formal investigation,” and a consumer advocacy group released a scathing memo this week about CAR’s buyer brokerage agreement.
This concerns various forms that the association wanted to publish in June of this year, as well as the draft of a new buyer’s contract.
Stephen Brobeck, senior fellow at the Consumer Federation of America (CFA), told Real Estate News that his team sent its criticisms of CAR’s buyer representation agreement to the Justice Department “several weeks ago.” However, CAR told Real Estate News that it stands by its forms and believes the Consumer Federation of America’s recent criticism is “misguided” for several reasons.
What CAR said about the CFA report: In a prepared response, CAR general counsel Brian Manson said CFA’s analysis of the buyer’s agreement focused on “an earlier draft that was still a work in progress,” and noted that the association “has already made changes that could address many of CFA’s concerns.” He also said CAR “seeks extensive input and considers all feedback” in preparing its forms.
Manson specifically objected to CFA’s claim that CAR’s draft buyer agreement was designed to circumvent the new rules required by the settlement with NAR.
“The CFA article states that the form is inconsistent with the NAR agreement. That is incorrect. Both the reviewed draft and the latest draft of the form comply with all practice changes required by the NAR agreement as well as with California law,” Manson said in the statement.
“The CFA also suggests that buyers could expect their brokers to represent them even if the buyer indicates they do not have enough money to pay the broker. It suggests that offers of compensation outside the MLS are attempts to circumvent the NAR agreement, even though the agreement explicitly makes it clear that this is permitted. The CFA’s suggestions are absurd.”
The forms comply with California law: Manson said the association’s forms “are drafted to comply with California law and facilitate California real estate transactions” and that the CFA report “demonstrates the author’s lack of familiarity with the California statutory language required for our real estate contracts.”
Too picky? CAR also objected to the CFA’s emphasis on style, arguing that “nearly half” of the 21-page report “consists of comments on punctuation, capitalization, and the author’s views on design, rather than substantive legal issues,” referring to the section of the CFA report that focuses on the reader’s understanding of the draft contract.
