New California State Law Requires Buyer Broker Agreement as of January 1, 2025.

 

Craftsman home in Long Beach

As predicted, Governor Newsom has signed into law AB 7229, the new requirement for buyers and their brokers to sign an agreement with each other before making an offer on  a property.  This law applies to both residential and commercial real estate.  There are some differences from the National Association of REALTORS settlement requirements already in practice, including the fact that the NAR settlement concerns residential property only, whereas the new state law (in effect starting January 1, 2025) covers all properties both residential and commercial, and all licensed agents whether or not they are REALTOR members of the National Association of REALTORS.

"Unlike the N.A.R. settlement, which focuses solely on homes listed on an MLS, AB 2992 requires a written buyer representation agreement for any property, residential or commercial, whether it is listed on an MLS or not. This means that all licensed real estate agents, regardless of the type of property they are showing, must have a signed agreement in place before representing a buyer. This is a significant improvement in transparency for consumers, ensuring that they are fully aware of the services their agent will provide and the compensation structure before engaging in any transaction."  from the Santa Barbara Independent, Oct. 3, 2024 .

Contracts may be renewed, and are limited to 3 months for each contract period. While some people may not understand the significance of having such a contract, as a buyer it is important to understand what is to be expected of the agent and the standard of care to be received by the buyer. Buying a property is a large financial and legal commitment, and both agent and buyer need to be actively engaged with each other. According to the NAR settlement, such contracts must be signed before showing a property which will affect REALTORS, and per state law, commercial agents must have a buyer agreement signed before submitting an offer.

It's worth noting that if the state law requirement for a buyer broker agreement is not met, the Department of Real Estate may remove an agent's license.

If you would like more information on working with a Realtor, please contact me for further explanation and consultation before entering into a contract.

See prior post for buyer broker contracts

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996