C
alifornia Governor Gavin Newsom has signed a law limiting contracts between homebuyers and their brokers to 90 days. The legislation, Assembly Bill 2992, restricts the mandatory three-month agreements that became required under the National Association of Realtors' (NAR) commission lawsuit settlement. This new law takes effect on January 1.

    The bill, introduced by Assemblywoman Stephanie Nguyen, requires written consent from both buyers and agents to renew their representation agreement every three months. California joins 27 other states in mandating such agreements, including Washington and Oregon. The NAR settlement shifts the responsibility of paying buyer agents' commissions to homebuyers unless they can negotiate with sellers to cover these costs.

    The law also requires sellers to sign listing agreements consenting to pay both buyer and seller commissions when their transaction closes. However, most buyers purchase homes without signing an agreement with their agents. The NAR was found guilty last fall of conspiring to inflate agent commissions and agreed to rule changes after losing a $1.8 billion verdict in a federal class-action lawsuit.