New Home Construction Transactions

Prior to “working with” and prior to “showing a property” to a prospective Buyer, Buyer’s Agent should have the Buyer sign either the BRBC Agreement (check Exclusive) or PSRA Agreement (limited representation). This applies to registering a Buyer at a New Construction Home Sales Office in order to receive a Referral Fee from the Builder.

1. Generally, the Buyer’s Agent “refers” the Buyer to the Builder and will receive a “referral fee.” Builder will then work directly with the Buyer.

• You must accompany your clients on the Buyer’s 1st visit to the Builder and sign a referral agreement. Keep a copy for your records. The referral agreement may only be in force for a certain amount of time [30 days, 60 days, etc.]. You may have to sign a new referral agreement after that period has expired.
• Always counsel your potential Buyers to not go to a New Construction Builder without contacting you so you can go with them.
• Obtain documentation from the Builder that indicates you are being paid a referral fee for referring your client to the Builder. Make sure it includes the amount of compensation. You may need to provide a W-9 from your Broker.
• Set up the Opportunity in Command using the New Home Checklist and upload copies of the Referral Agreement, Purchase Agreement and other Builder disclosures as well as Closing Documents and Closing Checks.

2. If Builder is represented by a Listing Agent, there are different requirements. Buyer is represented by you as Buyer’s Agent and you will be responsible for all standard Buyer-side documentation: Purchase Agreement, Statutory & other disclosures, including New Construction  documents, etc.

• Builder has hired a Listing Broker who will only represent Builder as Seller. This is typical of smaller home builders or contractors building “spec” homes.  What to do:
• Speak with Compliance Manager or Contract Support Manager.
• Treat the sale as a regular sale although you will need the following additional forms in your transaction.
• For newly-constructed completed homes.
  • Preferable – Use NCPA – New Construction Residential Purchase Agreement and Joint Escrow Instructions [Check your Zip Forms library.]
  • Acceptable – Use RPA with NCRPA – New Construction Addendum to RPA.
  • Other forms needed [Statutory disclosures [FLD, TDS, SPQ] may not apply.]
    1. NCA – New Construction Options and Upgrades
    2. NCDS-11 – New Construction Property Disclosure Statement
    3. NCEI – 11 – Common Interest Subdivision Supplemental Escrow Instructions
    4. NCNC – New Construction notice of Completion and Notice to Close Escrow
    5. NHD Report with NHDS.
    6. Consumer Booklets Links Receipt
    7. Other Builder Disclosures: Title 7 Disclosures, 1-Year Fit & Finish Warranty, 10-Year Structural Warranty, [CCRs & HOAs as applicable].
• It is critical that you use the proper New Construction Home forms.  To not do so could result in your client not being protected on unique issues related to new homes.
• Review CAR Legal AB 800 Construction Defect Law.

CAR Memo CA SB 800 110923