Buyers Beware

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Having studied contract law has served me well in real estate. REALTORs don’t generally understand that particular branch of law so many conventions continue to be ambiguously incorrect but accepted.

So when it comes to being a fiduciary for buyers and sellers, part of my value is being brief and precise so a Judge would appreciate our actions in the case of a dispute. Another benefit to my clients is to ensure risk does not survive the sale. Knock on wood, I have never been party to a dispute and don’t intend to. To remain out of court, I have to know what my clients are signing “Left of Bang“.

Most MLS listings include instructions and documents to give prospective buyers and their agents more information. Sellers typically provide their statutory disclosures and special instructions attached to their listing. It is convention to utilize the California Association of REALTORs CAR forms such as the Residential Purchase Agreement (RPA). CAR maintains and evolves these documents to reflect “reason” and legal decisions. These CAR documents are legally supported and vetted. My clients have protections in these documents if they are used well.

Enter seller Zillow with possibly 100 listings available in our 3 counties. A Title search shows 253 owned by Zillow Home Trust in our metropolis. THEIR listings currently require a buyer to complete and sign THEIR purchase agreement (PSA) and addendum. Whether a buyer uses the standard CAR purchase agreement to submit an offer, the Zillow agreement appears to be the executable contract once escrow begins.

Since their PSA becomes the executable, my buyers better know the risks that this NON-lawyer can determine. These following excerpts should give agents and buyers concern when entering an agreement with a different contract. These are my interpretations for my clients who are obviously advised to seek legal counsel if we can’t maintain risk and leverage.

When a change is introduced that has NEVER been attempted BUT is accepted and obeyed, that change becomes permanent and, if frequently accepted, becomes the new “norm”. This change, then, makes all precedents abnormal except in hindsight. Zillow has been offering prospective sellers a quick exit with short visits and, sometimes, a purchase price that exceeds the market. Sellers want a quick exit especially if the market is inserting overwhelming and exhausting requirements on a “normal”, market sale.

But Zillow, in all their wisdom, considers theirs the “normal”, market sale. This will cause a permanent change to the residential, real estate market. REALTORs as a collective aren’t much smarter than the buyers and sellers they represent. REALTORs, therefore, will gladly accept and obey Zillow’s rules.

Because C.A.R. doesn’t have a monopoly on the written agreement used in a sale (RPA) and doesn’t want to be sued, they can’t tell Zillow anything about the PSA. Our professional union (CAR) won’t even review it for legality.

This means Zillow has ‘free reign’ on changing the market thru the frequent use of their PSA. Thanks to our professional union, we have again made permanent ‘caveat omnus’ (all beware). The PSA may get adjudicated when disputes arise from its use. Then again, Zillow has a plan for this: Counter-sue. That action will delay ANY lawsuit.
PSA Section 1.6 – implied is that breach entitles seller to deposit WITH NO MENTION of contingency removals.
PSA Section 6.1 – Zillow took away a Buyer’s right to sue for specific performance if Seller breaches.
PSA Section 8.1 – Zillow owns the property and has never occupied it. Therefore, like an REO or Probate sale, the buyer cannot expect disclosures from Zillow. That’s dandy. And the time to review ‘updated’ seller disclosures shortened to 2 days.
There is no Mediation or Arbitration section in the PSA. How does the C.A.R. RPA sections carry thru?
Zillow advises hiring a lawyer to review their contract. Will Zillow pay for that?
Did Zillow’s seller avoid submitting disclosures to Zillow? Zillow is avoiding it
California RPA (12/2018, current)
  • 25. ATTORNEY FEES: In any action, proceeding, or arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller, except as provided in paragraph 22A.
California RPA (12/2021, draft/proposed)
  • 22. ATTORNEY FEES AND COSTS: In any action, proceeding, or arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller, except as provided in paragraph 30A.
Zillow PSA (current)
  • 9.8 Attorneys’ Fees. In any dispute between the parties, whether or not resulting in litigation, arbitration, or any other proceeding, both Buyer and Seller agree that (i) neither party shall be entitled to recover any attorneys’ fees, costs or expenses from the other even if one party is found to be the prevailing party, and (ii) each party shall be solely responsible for their own attorneys’ fees, costs or expenses incurred to resolve such dispute between the parties.
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