The Arizona REALTORS® Risk Management and Executive Committees have each voted to remove the Compensation Agreement Between Brokers (CABB) form from the Arizona REALTORS® library of forms on or about February 1, 2025. For consistency, the Arizona REALTORS® revised five (5) forms to either remove or edit language that referred to, and coincided with, the CABB.  Finally, both buyer broker employment agreements were revised. The changes are as follows:

• REMOVAL OF THE COMPENSATION AGREEMENT BETWEEN BROKERS (CABB)

The Compensation Agreement Between Brokers form will be removed from the Arizona REALTORS® library of forms.  The CABB was created last year to help implement the practice changes agreed to by the National Association of REALTORS® (NAR) as part of a class action lawsuit settlement.  One major practice change required the removal of offers of compensation to a potential buyer broker on Multiple Listing Services (MLS).  Offers of compensation made off the MLSs were still allowed, but there was no mechanism for such offers to be accepted or enforced.  The CABB form was therefore created to document compensation that may flow from the seller’s broker to the buyer’s broker.

As REALTORS® became more accustomed to the practice changes, the CABB was being used less frequently. The Seller’s Compensation Addendum (SCA) is instead used in a majority of transactions in which the seller chooses to compensate the buyer’s broker. There are several reasons for this, including the fact that some brokerages expressed concern about the legal risks associated with compensation flowing from the seller’s broker to the buyer’s broker. These brokerages were more comfortable with the SCA, which they believe better documents the fact that decisions about buyer broker compensation are in fact being made by the seller. Additionally, getting a CABB fully signed before touring a home or making an offer to purchase often proved inconvenient and difficult.

• REVISION OF FORMS REFERENCING THE CABB

With the removal of the CABB, five (5) other forms that refer to the CABB needed revision.

The Seller Compensation Addendum currently includes a section to disclose if compensation between brokers has already been agreed to and documented in a CABB (lines 15-18).  That section has been stricken since the CABB will no longer be available.

Currently, the four (4) Arizona REALTORS® listing contracts all include verbiage that allows a seller to authorize their broker’s communication of an offer to compensate to a prospective buyer broker.  With the removal of the CABB, the section of the listing contracts that provided the seller’s consent for their broker to enter into a CABB and reimburse them the amount of the offer is unnecessary and was stricken. 

The section related to communicating an offer of compensation to a potential buyer broker was also revised to remove specific monetary amounts since that dollar figure will now be negotiated directly between the buyer and seller as part of the purchase offer. This change simplifies the subject matter and reinforces the concept that sellers should focus on the amount of money they will ultimately net.    

Identical changes were made to the tenant broker sections of the listing contracts.

The below five (5) forms were thus revised:

• Seller Compensation Addendum- A redline version can be found here.

• Residential Listing Contract Exclusive Right To Sell/Rent- A redline version can be found here.

• Residential Listing Contract Exclusive Agency- The revisions mirror those of the Residential ER.

• Vacant Land/Lot Listing Contract Exclusive Right To Sell/Lease- The revisions mirror those of the Residential ER.

• Vacant Land/Lot Listing Contract Exclusive Agency- The revisions mirror those of the Residential ER.

• REVISIONS TO THE BUYER BROKER EMPLOYMENT AGREEMENTS

The Arizona REALTORS® has revised both of their buyer broker employment agreements.  Both the Buyer-Broker Agreement to Show Property form and the Buyer-Broker Exclusive Employment Agreement form will now include language to emphasize that any compensation agreed to must be a fixed amount or rate.  The practice changes agreed to in the NAR class action lawsuit settlement require that compensation the buyer agrees to pay their broker must be an ascertainable amount and not open ended (such as what a potential seller may be willing to pay).  The forms have been revised to make clear that any rate or amount of compensation agreed upon must be fixed.

• Buyer-Broker Agreement to Show Property- A redline version can be found here.

• Buyer-Broker Exclusive Employment Agreement- A redline version can be found here.

Aaron M. Green, Esq., a licensed Arizona attorney, is the General Counsel for the Arizona Association of REALTORS®.  This article is of a general nature and reflects only the opinion of the author at the time it was drafted.  It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.

Prior Form Revisions

The Arizona REALTORS® strives to keep all its forms up to date as laws change or industry practice evolves.  Once released, the forms library contained on all of the Arizona REALTORS® forms licensing platforms are updated. 

Form updates are made to minimize your risks and ensure legal compliance. Don’t take a chance with outdated forms.  Prior Arizona REALTORS® form revisions (2014 – 2024) can be found at:  https://www.aaronline.com/2019/05/20/form-revision-updates/