CAR contract and not having license

9 Replies

I live in California and sent out my contract to an agent on a great deal that his seller is interested in. The agent knows I don't have a real estate license and responded that since I'm representing myself that he would like me to submit a CAR contract. I'm going to assign my contract so should I add an addendum to the CAR contract or am I even allowed to use a CAR contract since I don't have my license???? Want to be safe and do it right. THOUGHTS????

The agent is required to use the CAR contract.  Don't expect the agent to recommend the seller accept if you can't show the ability to actually buy though.

Ok, got it. Yeah, I have a buyer who can show proof. It's ok to add an addendum if the contract does not specify that I am able to assign the contract? 

The POF will need to be in the Buyer's name....the one who signs the initial purchase contract. Read a copy of the contract, you'll see if it prohibits assigning too.

@Mike Flora It used to be fairly easy to assign these contracts.  However, the newest version of the CAR purchase contract (updated Nov 2014) now states "Buyer shall not assign all or any part of Buyer's interest in this agreement without first having obtained the separate written consent of Seller to a specified assignee."􀀜􀀗􀀘􀀆􀀆􀀑

What this means is - that in order to assign it - the Buyer, Seller and the Assignee must all complete and sign the new Assignment of Agreement Addendum (CAR form AOAA).􀀖􀀘􀀌􀀓􀀌􀀍􀀗 􀀥􀀞 􀀨􀀆􀀏􀀏􀀆􀀘􀀣 􀀟􀀋􀀣􀀉􀀣􀀇􀀣 􀀤􀀕􀀘􀀙 􀀉􀀪􀀉􀀉􀀢􀀣

Originally posted by @Mike Flora :

Ok, got it. Yeah, I have a buyer who can show proof. It's ok to add an addendum if the contract does not specify that I am able to assign the contract? 

Not a lawyer, but I would have some concerns if I wasn't licensed and was involving your buyer in the transaction with their POF/Preapproval. Potential to be construed as brokerage activity without a license. Just a thought.

I found the solution!!! I'm just having my buyer take down the deal and we work it out on the side lol. Thanks for the info guys.

Just to be clear, the agent might be required to use CAR forms by their broker but not for any other reason.  Also, they are violating their fiduciary duty to their seller if they refuse to present the offer to them because it's not on a form they prefer.  They could also very easily respond with a counteroffer on a CAR form that would remove any issues they might have with your purchase agreement.  It sounds like they're just being difficult.

CAR forms are available to anyone willing to pay the $799 annual fee to license them (this is just for access to the forms, not membership to CAR).

(Free legally reviewed forms for California are available at firsttuesday.us)

Like Phil points out, your concern with licensing has less to do with forms and more to do with whether you are representing the buyer.  If you are submitting a purchase agreement as the "buyer or assignee" then you are the principal and shouldn't require a license (I'm also not a lawyer).  Assigning a binding contract without a license seems clear in theory but is less clear in practice, hence the many "is wholesaling legal" threads recently.

@Matthew Peterson is correct. The agent may have instructions from their broker to use "only" CAR forms, but their fiduciary duty is to present all offers to the seller regardless of offer form type.

I just recently made an offer on a small REO office building that was listed by the "commercial" division of an otherwise residential brokerage. As a long time CRE investor and professional I rely on LOI's for less formal offers; and AIR PSA's for more formal and binding offers. I submitted my original offer on and AIR form and received pushback from the listing broker.

They didn't have an issue with us representing our sleeves but did request we resubmit the offer on the commercial CAR form.

After multiple email exchanges I picked up the phone and essentially told them the buyer, and entity I control, had made an offer on the form of their choice and it was within the scope of their fiduciary duty to present that offer to the seller, in this case a local bank.

I was told they could only work on CAR forms because it was a mandate from their principal broker, and "require by their E&O insurance carrier".

I simply informed them that their broker did not have the option to mandate the type of offer a buyer could make, and E&O insurance doesn't cover contract type rather it covers professional conduct.

Reluctantly they submitted to the bank. It was rejected as insufficient in price. Ironically the building burned down and the bank now has the land on the market for a price close to my offer.

that's a crazy story, I knew he had to tell the seller about my offer and he did but like your saying his broker makes the agents use the CAR forms. It's ok, I'm working it out and I'm the middle man bringing everyone together tomorrow at the property and staying out of the deal but getting my share on the side. Good learning about CAR contracts and working with agents on deals!! 

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