Understanding the CAR Residential Contracts Series – Intro

homesEvery year we work with hundreds of individuals including investors, buyers, sellers, and real estate professionals. This work is centered on understanding how the real estate contracts effect everything from a specific performance and non-disclosure lawsuit to the relationship between buyer and seller or client and agent to the impact on an earnest money deposit. Despite the number of individuals we routinely assist on these types of matters, it was realized that we have never put together a multi-part series on understanding how these contracts and agreements actually work and what do they mean.

We have addressed portions of the agreement such as whether to initiate the arbitration provision. We have discussed specific performance actions when the seller breaches the agreement. We have discussed at length non-disclosure lawsuits. But we have never put together a series that addresses the CAR Residential Contracts.

Each transaction is governed by a series of contracts and agreements that determine in rights, obligations, and liabilities of the parties to the contract. In the context of the residential buy/sell transaction in California, the most common contracts to be used are those CAR (California Association of Realtors) form contracts. These contracts run the gamut of situations, including conventional sales, home equity sales acts transactions, and seller-financed transactions to name a few. They deal with situations involving seller leasebacks, the buyer in possession, options, and just about any other issue you can think of that may reasonably pop up in a transaction.

The purpose of this series is going to be to give both the parties to a transaction and the agents a look at the main CAR Residential Contracts, including the Residential Purchase Agreement (“RPA”), the Real Estate Agency Disclosure, Buyer’s Inspection Advisory, the Disclosure Documents (TDS/SPQ/AVID) and Notices (Notice to Perform or Demand to Close Escrow) and how they work together in guiding and documenting a residential transaction. Some of these documents are legally required (such as the TDS) and carry significant liabilities when not completed. Others, such as advisories are good business practice and disclosures for the parties to a transaction. These agreements have been used extensively in California and cover a multitude of scenarios and are designed to capture and cover many different scenarios that may arise during a transaction.

In the next article, we will begin to break down the RPA. This is the contract that forms the basis of the relationship between the parties. Not only does it determine price and closing time-frame, it also identifies and sets the contingency period and process. It defines how a contract can be canceled or how to cure a potential breach. It sets the liability limits on certain breaches and provides the parties with the bulk of the remedies in the event of a default by another. There is an abundance of case law on the subject of interpreting this contract and we will look at some of the more important cases and their impact on this document.

The one thing to take away from this upcoming series is that whether you are a party to a transaction or an agent guiding a client you need to know and understand just how these contracts work together to complete the real estate transaction.


The attorneys of BPE Law Group, PC. have been advising our clients on real estate and business issues for over 20 years. If you have questions concerning any legal matter, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consults

for new clients may get you the answers you need for the questions you have.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.


keith-1The most common residential contracts used in California for a transaction are those form contracts created by the California Association of Realtors. Today we kickoff a series written by the attorneys here at BPE Law that will unpack these contracts and give parties and their agents a background in these agreements and what they mean.

As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at kbdunnagan@bpelaw.com.

Also, remember that we do legal presentations for business and community organizations. If your group would like this, please contact Alex, Steve or me to set up a date and time.