California real estate transaction rules

Written buyer agency / buyer agreement: when it must be signed and what it must say

Since Jan. 1, 2025 (AB 2992), a written buyer-broker agreement is required no later than when the buyer signs an offer. It is capped at 3 months.

• A buyer-broker representation agreement must be signed “as soon as practicable, but no later than” when the buyer signs an offer to purchase (Cal. Civ. Code § 1670.50(a)).
• The agreement must cover the broker's compensation, the services to be provided, when compensation is due, and how the contract can be terminated (§ 1670.50(b)).
• Before signing, the buyer's agent must give the buyer the agency disclosure form required by Civil Code § 2079.14 (§ 1670.50(c)).
• The agreement can't last more than three months, and it can't renew automatically. A renewal must be in writing, dated, and signed by all parties, and is also capped at three months. Agreements that violate these limits are void. The cap does not apply to corporations, LLCs, or partnerships (§ 1670.50(d)).
• DRE regulations (10 CCR § 2906.1): the three-month limit means 90 calendar days, counted from the day after the last party signs, unless the parties agree to a later start date. Renewals must be in writing and signed before the agreement expires, and agreements can't renew automatically.
• 10 CCR § 2906.2: there is a rebuttable presumption that it is practicable to get the agreement signed before the agent shows the buyer a property, in person or virtually. A seller's agent hosting an open house is not treated as acting as the buyer's agent there.
• 10 CCR § 2906.3: the agreement is required only when the broker performs licensed services for the buyer under Bus. & Prof. Code § 10131(a).
• AB 1521 (Chapter 200, Statutes of 2025) corrected the buyer-agreement disclosure in Bus. & Prof. Code § 10147.5 so it says compensation is negotiable between buyer and broker (per DRE). We have not confirmed that change's effective date from the bill text. Not verified yet.
• We did not find the effective date of the DRE regulations on the DRE regulation PDF. Not verified yet.

Are escalation clauses allowed, and who may draft them?

No California statute or DRE rule on escalation clauses was found. DRE cautions agents against heavily rewriting standard forms.

• We found no California statute or DRE regulation that specifically addresses escalation clauses.
• DRE's Reference Book warns that extensive rewriting of standard printed forms by a licensee “could be construed as the unauthorized practice of law,” and says changes should go in the form's blank spaces, counteroffers, or addenda. This chapter of the Reference Book is informational and older (2010 edition).
• C.A.R.'s public list of standard forms (checked 2026-10-18) does not show a form with “escalation” in its title. C.A.R. member legal guidance on escalation requires a login and was not reviewed. Not verified yet.

Must a licensed attorney handle the closing?

No. California closings run through a neutral escrow holder. Escrow agents must be licensed unless exempt (banks, title companies, and attorneys in some cases).

• DRE describes California residential closings as handled through escrow, with a neutral escrow holder following the parties' written instructions.
• Under the Escrow Law (Fin. Code § 17200 and following), escrow agents must be licensed corporations, except for exempt entities such as banks, title insurers and underwritten title companies, attorneys who aren't actively in the escrow business and have a bona fide client relationship, and brokers handling escrow in their own transactions.
• We found no California rule that requires an attorney to conduct a residential closing. Parties may still hire one. DRE's Reference Book chapter on escrow is informational and older (2010 edition).

Who holds the deposit and how fast it must be deposited

A broker must place the deposit into escrow, a trust account, or the owner's hands within 3 business days.

• A broker who accepts funds for someone else must place them with the owner of the funds, with a neutral escrow depository, or in the broker's trust account no later than three business days after the broker or salesperson receives them (Bus. & Prof. Code § 10145; 10 CCR § 2832(a)).
• A buyer's deposit check may be held uncashed until the offer is accepted if the check is non-negotiable or the buyer gave written instructions, and the seller is told it is being held. After acceptance, it must be deposited within three business days unless the seller authorizes otherwise in writing (10 CCR § 2832(c)–(d)).

Can one broker represent both sides, and on what terms?

Allowed only with the knowledge and consent of both parties. It must be disclosed and then confirmed in writing in the contract.

• The statutory agency disclosure form explains that an agent may act as a dual agent only with the knowledge and consent of both seller and buyer (Cal. Civ. Code § 2079.16).
• The buyer's agent must give the buyer the agency disclosure form as soon as practicable, before the buyer signs the buyer-broker agreement and the offer. If someone other than the agent prepares the offer, it must be given no later than the next business day. A signed acknowledgment is required (§ 2079.14, as amended by AB 2992).
• The agent must disclose, as soon as practicable, whether they act for the buyer only or as a dual agent. That relationship must be confirmed in the purchase contract or a separate writing signed before or at the same time as the contract (§ 2079.17).
• A dual agent may not share either client's confidential information without that client's express permission. That includes price flexibility, motivation, and financial position (§ 2079.21).

Key required seller disclosures

Transfer Disclosure Statement (TDS) and Natural Hazard Disclosure (NHD). Late delivery gives the buyer 3 or 5 days to terminate.

• Sellers of most 1–4 unit residential property must deliver the Real Estate Transfer Disclosure Statement in the statutory format (Cal. Civ. Code §§ 1102–1102.6).
• The TDS must be delivered as soon as practicable before title transfers. If it is delivered after the buyer signs an offer, the buyer may terminate within 3 days after in-person delivery, or 5 days after delivery by mail or electronic record (§ 1102.3).
• A separate Natural Hazard Disclosure Statement covers whether the property is in specified zones: FEMA flood hazard areas, dam inundation areas, very high fire hazard severity zones, wildland fire areas, earthquake fault zones, and seismic hazard zones (§ 1103.2). The California Attorney General has opined that the buyer may terminate if it isn't delivered before title transfers (Opinion 01-406).
• New: AB 455 (Chapter 263, Statutes of 2025) requires a seller of single-family residential property who knows of tobacco or nicotine smoking residue or history on the property to disclose it (per DRE). DRE's summary does not state the effective date. Non-urgency California statutes ordinarily take effect January 1 of the following year, but we have not confirmed this one from the bill text. Not verified yet.
• Other disclosures exist (for example HOA documents and local disclosures). This page does not catalogue them all.
• Federal rule: for most housing built before 1978, sellers must give the lead-based paint disclosure.

The standard inspection, due diligence, or option period in the common state form

C.A.R. RPA: 17-day investigation contingency by default. It is not waived automatically.

• Under the C.A.R. Residential Purchase Agreement, contingencies such as the investigation contingency run 17 days by default unless the parties change that in writing.
• The contingencies are not waived automatically when the 17 days end. The buyer must remove them in writing or cancel. After the period ends, the seller may serve a Notice to Buyer to Perform giving the buyer two days to act, and may cancel if the buyer doesn't.
• Our source for the 17-day default is a C.A.R. Quick Guide. C.A.R.'s public forms list shows the current RPA edition as revision 2024-12. We have not checked the 17-day figure against that edition, because the full form requires member access. Not verified yet against the current form.