California Association of Realtors Faces Inquiry Over Contracts and Forms Compliance

The California Association of Realtors is facing scrutiny from the U.S. Justice Department over its contracts and forms used in housing transactions. The Consumer Federation of America raised concerns about the complexity and anti-consumer provisions in the association’s documents.

The association has been revising dozens of standard forms, addenda, and contracts to comply with a national real estate commission settlement set to take effect in August. The settlement aims to address issues such as seller payments of buyer agent commissions and the need for home shoppers to sign contracts with agents before visiting homes.

CAR recently released updated forms in response to the Consumer Federation’s critiques, but the Justice Department’s formal inquiry has led to a delay in the release of 19 forms. The details of the inquiry and the concerns raised by the department have not been disclosed.

Consumer advocates believe that U.S. real estate commissions, which are among the highest in the world, could decrease if buyers paid their agents directly. The Consumer Federation’s critiques of CAR’s contracts highlighted issues with readability, formatting, and provisions that may be unfair to sellers.

CAR has defended its forms, stating that they are based on California law and comply with the national settlement. The association refuted the Consumer Federation’s claims and emphasized the importance of educating sellers about the MLS and the offer process.

The ongoing investigation by the Justice Department and the debate over real estate commissions highlight the complexities and challenges in the housing market. As the industry continues to evolve, it is crucial for all stakeholders to work towards transparency and consumer protection in real estate transactions.