Gov. Gavin Newsom signed laws on Tuesday, Sept. 24, that limits the length of real estate contracts between homebuyers and their agents to 3 months, implementing a deadline on agreements that became mandatory last month following the National Association of Realtors' settlement within the commission lawsuit.
Legislative Assembly Bill 2992 was passed unanimously within the state legislature last month.
The latest law requires the written consent of each the customer and the broker to renew buyer representation agreements every three months.
Since August, a minimum of 27 states, including Washington and Oregon, have required such agreements, based on the California Association of Realtors, which introduced the bill.
California law only requires sellers to have written agreements with their agents, however the NAR settlement made such agreements mandatory for all buyers working with agents who’re members of a Realtor-affiliated multiple listing service, a database of homes on the market.
See also: How do the brand new real estate rules work? Answers to your questions
Until the agreement was reached, NAR required sellers to pay each buyer and seller commissions. According to a NAR survey, only 4 in 10 buyers had written agreements with their brokers by 2023.
Under the brand new NAR rules, buyers are chargeable for paying their very own brokerage commissions, but can require the vendor to cover their share during purchase negotiations.
NAR agreed to the rule changes after losing a $1.8 billion class motion lawsuit in federal court in Missouri.
AB 2992 was one among 18 consumer protection laws the governor signed on Tuesday.
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