Architects and designers often debate the relevance and importance of "function" versus "form." When it comes to the real estate transaction, function always dictates which C.A.R. standard form to use. Today's market, marked by an abundance of distressed properties, requires forms rarely used two years ago. Here's an overview of thestandard forms that are relevant to today's market and the circumstances under which they should be used:

Agent Visual Inspection Disclosure (C.A.R. form AVID)

This form accomplishes many purposes. First, it provides ample space for a real estate agent to document that the agent has performed a reasonably competent and diligent visual inspection of the accessible areas of the property being sold as required by Civil Code section 2079 et seq. Although space has been statutorily allocated to this purpose on the Real Estate Transfer Disclosure Statement (C.A.R. form TDS), the four and a half lines provided for each agent to document her own inspection proved woefully inadequate most of the time. The form allows an agent to document an inspection room byroom. By doing so, the agent establishes credibility in case a dispute arises in the future affecting the agent's professionalism. Additionally, the format may help an agent remember the transaction since many disputes occur long after a property has closed escrow. The listing agent and the cooperating agent should each fill out their own AVID. On the agent's portion of the TDS, the agent can write in, "See attached AVID form."

Short Sale Listing Addendum (C.A.R. form SSL)

This form was released in August 2007, three months ahead of the normal November release period, to accommodate the increasing number of situations in which the property to be sold does not have enough equity to pay off, in full, existing liens and other costs of sale. Its purpose is to make sure that a seller anticipating a short sale has been advised of certain information. First, a short sale is but one of many options available to a seller. Second, although selling the property may relieve the seller of one burden, tax consequences may result. Third, the sale may have negative credit implications. Fourth, there may be a discrepancy between what the seller wants and what the lender is willing to agree to. Finally, the broker is given authority to negotiate withthe lender and the seller is advised to get independent legal and tax advice.

Short Sale Addendum (C.A.R. form SSA)

Introduced in November 2007, this form is used as an addendum to a purchase contract. Where the SSL is a disclosure between the seller and listing broker, the SSA is a contract between the seller and a buyer. The SSA makes the purchase contingent upon the seller's lender approving the sale at the price agreed to between buyer and seller. If approval does not come by an established date,then either party may cancel the purchase. Buyers are notified (warned) that purchasing short sale properties involves risk. The buyer may spend money, out of pocket, on inspections, appraisals, and loan applications, to name a few, and if the lender doesnot approve the sale, the buyer will be unable to recover the money spent. Further, the buyer is told that offers by other prospective buyers will be forwarded to the lender. The seller is notified that there is no assurance the lender will approve the sale, and even though a contract is signed, the property may nonetheless be lost through foreclosure. As with the SSL, the SSA instructs the seller to get independent tax and legal advice regarding the consequences of a short sale. Prior to release of theSSA, REALTORS® could use paragraph 5 of the Purchase Agreement Addendum (C.A.R. form PAA) when lender approval of a short sale was required. With the advent of the SSA, the PAA will be modified to remove the short sale paragraph.

Notice of Transfer Fee (NTF)

This form was released in November 2007 in response to state legislation. A relatively recent phenomenon (most have been established in the last five years or so), private transfer fees are usually originated by developers seeking approval for a building project. Subsequent buyers or sellers or both (but usually not the developer or original buyer) are saddled with the obligation to make a payment to a fund or organization created by the developer for a private purpose (such as, but not limited to,assisting affordable housing, or protecting species or the environment). Sellers of property subject to this fee are required to give notice via this form effective January 1, 2008. Whether more of these fees are established is something to watch.

Seller Property Questionnaire (SPQ)

This form, which benefits both buyers and seller, was modified to include questions present in a separate form called Supplemental Statutory and Contractual Disclosures (C.A.R. form SSD). Now, instead of using two forms (SPQ and SSD), one, the SPQ, will suffice. The SSD is still available separately. Also in November, the California Residential Purchase Agreement (C.A.R. form RPA) was amended to include an optional check box in paragraph 25 to allow the buyer to request that the seller provide the buyer with the SPQ form.

Neil Kalin is C.A.R.'s assistant general counsel, senior legal advisor to the Standard Forms Advisory Committee, and "Legal Blog" editor.