This is Danny Naylor at the Institute of Real Estate Education. I’ve got an update for you. The Real Estate Purchase Contract approved by the Division of Real Estate in Utah has been updated over the weekend. This is a change that’s going to affect all agents. This is the required form for agents to use if they’re setting up an offer on a regular residential piece of property. And in part this is due to some of the changes that due to the NAR lawsuit.
Most of the things we’ve talked about in recent videos have been NAR specific, where NAR has agreed that their members will do certain things to comply with the settlement agreement. However, this is a state document approved by the Division of Real Estate, which is a department of the Utah government that oversees real estate. This is official for everybody, not just members of the Association of Realtors®.
New Paragraph 4(e)
In the Real Estate Purchase Contract, we’ve added on page 2, section 4, a new paragraph called Real Estate Brokerage Compensation. It says the “Seller’s compensation contribution to Buyer’s Brokerage.” In other words, the Seller will be paying commission directly to the Buyer’s Brokerage based on this section of the agreement if something is put in here. So it says Seller and Buyer agree that Seller shall contribute either a percentage of the purchase price or a dollar amount to the Buyer’s Brokerage.
And if no box is checked, then the Seller has not agreed to compensate the Buyer’s Brokerage in the Real Estate Purchase Contract. But if they do check a box, then the Seller is agreeing to pay directly to the Buyer’s Brokerage.
In the past, there has commonly been an agreement between Buyer’s Brokerage and Seller’s Brokerages to pay commissions between each other through the Multiple Listing Service. Now that has changed, and is gone from the industry. The Division of Real Estate decided it was appropriate to add a provision to the Real Estate Purchase Contract to address this. The Utah Association of Realtors (UAR), recently created an addendum that you could use to add language like this into your Real Estate Purchase Contract (REPC), but now the actual REPC has this clause built in.
Compensation IN ADDITION
Something to note is that it says here that if that the Buyer amount that the Seller is going to pay is IN ADDITION to any compensation agreement between the Seller Broker and the Buyer Broker, similar to the UAR addendum. That is important to note that this doesn’t replace or become part of any Broker-to-Broker commission sharing, this would be in addition to that. So the primary use of this would be if you have a Seller Brokerage to Buyers Brokerage agreement, if that doesn’t cover all of the Buyer Broker commission that is owed by the Buyer, then you can put the remainder in this section of the REPC if the Buyer and Seller agree. So if the agreement between Brokerages doesn’t quite cover the commission the Buyer agreed with their Broker, then this can bump it up so that it is covered. But remember, according to the NAR settlement, a Buyer-Broker is not allowed to accept any more compensation than is agreed to in their Buyer-Broker agreement.
Escrow Authorization
There is just one other change here which is in letter F which used to be letter E. They slightly changed the beginning sentence here to say instead of just saying that the “escrow office is authorized” they now specify that the “Buyer and Seller authorize and direct the escrow closing office to withhold” funds at closing from the Seller to pay off mortgages, trustees, judgments, mechanics, liens, tax liens, warrants, and they added Real Estate Brokerage compensation.
That’s the only changes that they’ve made in this Real Estate Purchase Contract. It is important to know that this is now an official form with the state of Utah and this is the new, required Real Estate Purchase Contract. All agents should be using this new form. It is already available on the Division of Real Estate website. So you can download it now and take a look at it. Here is a link to the new form, with the changes highlighted:
This is all similar to what we’ve been talking about with the NAR settlement, but now this one is an official state form that’s been updated with a similar purpose. Hopefully that’s enough to understand how to use it and I’ve had other videos to talk about kind of questions that might have come to your mind, hopefully those are helpful too. Let’s get out there and do the best for our clients!
Still Have Questions about the NAR Settlement?
You can read or watch part 1 here:
You can read or watch part 2 here:
You can read or watch part 3 here: