Initial Observations On C.A.R.’s Revised COP

by David Hamerslough and Victoria B. Naidorf

One of the forms that we understand C.A.R. will release in December 2026 is a revised Contingency For Sale Of Buyer’s Property (“COP”). This and next month’s article provide some of our initial observations on the revised COP.

Our approach in these articles is to spotlight (1) the default positions of the COP, (2) some of the information that will need to be filled in to complete the form, (3) some of the options that the buyer and seller have if they elect to opt out of the default positions, and (4) some of the issues the parties should consider with respect to the revised COP.

As with any industry form, the revised COP attempts to address as many scenarios as possible. Some of these scenarios favor the buyer; others favor the seller. Buyers and sellers will need to evaluate the impact of these scenarios to determine if they meet their needs and wants. What choices are made and/or agreed to will likely be impacted by, among other things, market conditions, the motivations of the buyer and seller, and the presence of a backup offer.

Format And Definitions

The revised COP utilizes a grid format similar to, among others, the C.A.R. RPA. Please remember that the grid does not contain all of the terms and conditions of the agreement. Additional/supplemental terms and conditions are contained in the corresponding paragraphs identified in the grid or are contained in the balance of the form. Don’t rely solely on the terms and conditions contained in the grid.

The revised COP, like other industry forms, contains defined terms. These terms have the first letter of each term capitalized. Because the COP refers to two contracts with different timelines for close of escrow, contingencies, etc., buyers and sellers need to understand all of these defined terms and how they impact each of the these transactions.

The introductory paragraph of the COP states that the COP is an addendum to the “Purchase Agreement” and then uses the term “Agreement” throughout the balance of the form to refer to the Purchase Agreement. This is the agreement for the buyer’s purchase of the “Seller’s Property” (another defined term). The property that the buyer is selling in order to complete their purchase of the Seller’s Property is referred to as the “Buyer’s Property.”

The introductory paragraph also states that defined terms in the Agreement apply to the COP. Those would include those definitions in ¶ 25 of the RPA (e.g., Days, Delivery, Notice To Buyer To Perform (NBP), Demand To Close Escrow (DCE), etc.). The term “Acceptance” when it is used in the COP means acceptance of the purchase agreement of the Seller’s Property (i.e., the Agreement). This is important to establish the starting point for any timelines set in the COP.

“Escrow Evidence” is a term defined in ¶ 2B of the COP. The definition “shall mean (i) A copy of the contract for sale of Buyer’s Property [the property that the buyer is selling that forms the basis for the contingency]; and (ii) The contact information and the escrow number for that sale.”

Paragraph 5B(1) creates a defined term (“Updates”) that includes information about the status of the transaction for the sale of the Buyer’s Property, including any “changes, modifications, addenda or amendments to the terms of the accepted offer or delays to or removals of contingencies.” It does not appear that this defined term is used anywhere else in the COP. We suspect that it may be used as a definition in communications between agents requesting status “Updates” or in an addendum regarding the same subject.

The defined phrase “Entering into Contract” (COP ¶ 1B(1)) refers to the contingency that the buyer may elect, if applicable, to enter into a contract for the sale of the Buyer’s Property.

The defined phrase “Closing Escrow” (COP ¶ 1A(1)) refers to the contingency that the buyer has, if applicable, to close escrow on the sale of the Buyer’s Property before being obligated to complete their purchase of the Seller’s Property. What needs to be distinguished is the close of escrow on the sale of the Buyer’s Property from the date for close of escrow on the buyer’s purchase of the Seller’s Property. The COP uses the defined term “Close Of Escrow” to refer to the close on the buyer’s purchase of the Seller’s Property. These distinctions are important because the COP refers, in other locations, to close of escrow in lower case, uses the shorthand abbreviation “COE” in the grid (¶ 1C(3)), and uses the term “close” and “closing” in lower case. Where that occurs, the parties need to make sure that they understand whether each reference is to the Buyer’s Property or the Seller’s Property.

The term “Adjustment,” if applicable, refers to additional time for the close of escrow of the sale of the Buyer’s Property if the scheduled close of escrow for that property is after the close of escrow date for the Seller’s Property.

We are using the COP’s defined terms in this article.

Buyer’s Property Contingencies (Paragraphs 1A(1), (2), (3))

Paragraphs 1A(1)(A) and 2A of the COP make the Agreement for the purchase of the Seller’s Property contingent upon (1) the buyer entering into a contract for the sale of the Buyer’s Property and (2) closing escrow on the sale of that property. The default position is that both of these events are a contingency to be separately removed by the buyer.

Per Paragraphs 1A(1)(B) and 1A(1)(C), a buyer does have the option to make its purchase of the Seller’s Property contingent only upon entering into a contract for the sale of the Buyer’s Property or, alternatively, only upon closing escrow on the sale of that property. If a box is checked for either contingency separately, then it is the only contingency.

If entering into contract is a contingency, buyers need to understand that once they enter into a contract to sell Buyer’s Property, they can no longer use the contingency to enter into a contract to cancel the Agreement to purchase the Seller’s Property (¶ 4B). In other words, the buyer does not get multiple opportunities/contingencies to enter into a contract for the sale of the Buyer’s Property.

If close of escrow contingency is in effect, the default position under Paragraph 1A(2) is that Buyer’s Property is already in escrow. The buyer does have the option to check that that has not yet occurred. Paragraph 1A(2) requires the buyer to provide the name of the escrow company, the escrow number, and the close of escrow date for the sale of Buyer’s Property. It also assumes/defaults to the position that any contingencies on a buyer’s purchase of the Buyer’s Property (e.g., loan, investigation, appraisal, insurance, etc.) have not been removed. If they have been removed, there is a box that can be checked to so indicate.

Finally, Paragraph 1A(3) requires that Escrow Evidence (as defined above and in the COP) will be Delivered within 2 (or ____) Days after Acceptance or if a box is checked, this information is attached. If the contract for the purchase of the Buyer’s Property is not already in escrow, then the buyer is to provide Escrow Evidence with 2 (or ____) Days after entering into contract for the sale of that property.

The timeframes for removing the Entering into Contract contingency and for Close Of Escrow on the Seller’s Property are set forth in the Terms And Conditions section of ¶ 1A(1) of the grid. The default position for the removal of the Entering into Contract contingency is “17 (or ______) Days after Acceptance [of the RPA for the purchase of the Seller’s Property] OR 2 (or ______) Days after entering into contract for sale [of the Buyer’s Property]; whichever occurs first.”

The default position for removal of the contingency for close of escrow on the sale of Buyer’s Property is that it shall close by Close Of Escrow of the Seller’s Property or, if a box is checked, no later than 5 (or ____) Days prior to the Close Of Escrow of the Seller’s Property.

In most situations, the correlation/timing for removing the Entering into Contract contingency should not be an issue. However, coordinating the closing dates for two transactions presents a different challenge, especially if the Buyer’s Property is not in contract at the time the COP is signed. A buyer will want as much time as possible, while a seller may be reluctant to agree to additional time without knowing the terms and conditions of the contract for the sale of the Buyer’s Property and the extent that it may impact a sale to a potential backup buyer. This likely will result in a negotiation between the parties, which may prove challenging, given their respective motivations and concerns.

C.A.R.’s solution appears to be the “Adjustment” to the Close Of Escrow (¶ 1C(3) and ¶ 4C(1)-(4)). Collectively, these paragraphs may provide for more time on the Close Of Escrow of Seller’s Property but allow a seller to cancel if the sale of the Buyer’s Property is scheduled to close after the Close Of Escrow of the Seller’s Property. If the seller does not cancel, then the buyer, if this has been agreed to in ¶ 1C(3), may extend the Close Of Escrow on the purchase of the Seller’s Property as specified in the grid.

Here are some issues to consider in this situation. First, the default position under ¶ 1C(3) is that

there is no Adjustment on the Close Of Escrow for the purchase of the Seller’s Property unless a box is checked and a specific number of additional Days is filled in or a specific date for close of escrow is filled in. Second, if no time frame or date is filled in, then there is no additional time. Third, the time frames or dates that are filled in control; the buyer does not have the right to obtain more time unless agreed to by the seller. Fourth, if the seller exercises their right to cancel, even if additional Days are provided in ¶ 1C(3), the buyer does not have any additional time. Fifth, the seller’s right to cancel does not require that an NBP be delivered by the seller (¶ 9D). Sixth, if the seller cancels, the contract specifies that the buyer receives a return of the buyer’s deposit.

The seller and buyer should consider the following acts that each of them need to take in this situation. Paragraph 4C(1) provides that the cancellation is to be made “within 3 Days after receipt of evidence of Buyer’s Property entering into contract.” Based on the language in ¶¶ 4A and 4C(1), we presume that the “evidence” means “Escrow Evidence” as that term is defined in the COP (¶ 2B). If our presumption is correct, we would like to see the same language used in ¶¶ 4A and 4C(1) or the inclusion of a cross-reference to these terms/definitions.

Escrow Evidence requires that a copy of the contract for the sale of the Buyer’s Property and the contact information and the escrow number for that sale be provided. While the COP contemplates the buyer providing Escrow Evidence, it is possible that communication of the Buyer’s Property entering into a contract may occur by email. If the documentation/information required to establish Escrow Evidence does not accompany the email, we recommend that the seller clarify that their cancellation right is not triggered until that documentation/information is provided.

Another issue to consider under ¶ 4C(2) occurs when the seller elects not to cancel. This paragraph states that the buyer may extend the Close Of Escrow for the sale of the Seller’s Property by “Delivering to Seller written notice at the time Buyer removes the Entering into Contract Contingency, if applicable.” (Please note that the word “Contingency” is capitalized in this provision but not in the defined term itself as used elsewhere in the COP. We anticipate that C.A.R. will address this inconsistency.) If no written request is made at that time, there is the potential for a waiver of that right on the part of the buyer.

Buyers and sellers need to remember that there is a distinction between providing evidence of entering into a contract and the removal of a contingency for doing so. While the COP appears to contemplate that both will occur at the same time (¶¶ 4A, 9B), this may not be the case, as illustrated by our email example above. If that occurs, the seller needs to understand that their cancellation right is triggered by the buyer providing evidence of their entering into a contract, not by the contingency removal. The parties need to recognize that the buyer still has to remove the contingence for entering into the contract. For this to occur, the seller needs to Deliver an NBP (¶ 9B).

Listing And MLS Status

These issues are addressed in Paragraph 1B(1) and Paragraph 1B(2) of the COP. With regard to the listing status, the default position is that the Buyer’s Property is already listed and already submitted to the MLS. There is an option, if a box is checked, for the buyer to indicate in Paragraph 1B(1) that the property will be listed within 3 (or ____) Days after Acceptance. The identity of the listing agent/broker needs to be provided in this section.

With regard to the MLS status, Paragraph 1B(2) also has an option for submittal to the MLS to occur within 2 (or ____) Days after Acceptance or, alternatively, if checked, within 2 (or ____) Days after signing a listing. The name of the MLS is to be filled in a blank space.

We suggest that a seller consider and potentially address in a counteroffer the following two issues:

(1) the listing status in order to evaluate the marketing exposure that the Buyer’s Property is going to receive. Our understanding is that MLS Listings, Inc. considers any listing to be “on the MLS.” The issue is whether the exposure the Buyer’s Property is receiving is based on a private exclusive, members only show, or full market exposure; and

(2) the price at which Buyer’s Property has been listed and whether that is realistic given market conditions.

About David Hamerslough

In his 35 years of practice, Dave Hamerslough has litigated and arbitrated residential and commercial real estate disputes on behalf of brokers and agents, buyers and sellers, and landlords and tenants. Dave also acts as a mediator and arbitrator of real estate disputes. He also teaches courses and writes articles on these subjects to brokers, agents, attorneys, and consumers.

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