BUYER-BROKER REPRESENTATION AGREEMENTS ARE NOW A MUST (February 2025)

The California Legislature has tightened the grip on brokers/agents representing buyers.  Effective January 1, 2025, Civil Code section 1670.50 makes it mandatory for all agents representing a buyer to have a written buyer-broker representation agreement (“BBRA”) with the buyer.  The BBRA must be executed as soon as practicable, but no later than the execution of the buyer’s purchase offer, and include, without limitation, all of the following: (1) the broker’s compensation, (2) the services to be rendered, (3) when compensation is due, and (4) the contract termination.

The term of a BBRA cannot be longer than three months, unless the buyer is a corporation, limited liability company, or partnership.  Automatic renewals are not permitted.  All renewals must be in writing and be dated and signed by all parties. Renewals with a buyer who is not a corporation, limited liability company, or partnership cannot exceed three months.  Violation of these requirements renders the BBRA void and unenforceable.

Prior to execution of a BBRA, the agent must provide to the buyer the form known as “DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP.”

A violation of any of the above requirements constitutes a violation of the real estate licensing law.  Brokers and agents should be careful to comply with all of the requirements when representing buyers so as not to be subject to discipline.