Real-estate paperwork Q&A

Forms, forms and more forms.

Buying a house used to be relatively simple. Like the price? Just sign here. Now it appears you may need a law degree to understand everything you sign.

But there are good reasons there is so much paperwork needed to close a deal.

Here are answers to questions about real-estate paperwork that were submitted to the Northwest Multiple Listing Service (NWMLS), the real-estate association based in Kirkland that tracks home sales across much of the state and creates and sells forms to real-estate agents.

The answers were provided by the staff of the NWMLS.

Q: Why the increase in the paperwork required to close a residential real-estate transaction over the past 20 to 30 years?

A: First, changes in state law (both statutory and case law) and local ordinances over the years require that certain provisions be included in the parties' contract.

Second, the parties to residential real-estate transactions have become more sophisticated.

Buyers now generally require that their agreement to purchase be contingent upon an inspection of the property, the buyer obtaining financing, the buyer's review and approval of the condition of title and other due-diligence matters.

On the other hand, sellers want to make certain that a buyer has the financial resources to close the transaction before agreeing to take their property off the market.

Both the buyers' and sellers' increased demands have added to the length of the forms.

Finally, the tendency toward litigation these days requires that the contract include various protections for the seller, buyer and the real-estate agents in the transaction.

Q: How is the determination made that a new form is needed, and then how is it created?

A: There are two processes that can lead to the creation of a new or revised form.

The first is a response to an industry need, identified by sellers, buyers, real-estate brokers or other industry experts.

These changes are made to deal with market trends and to accommodate the needs of the parties.

This process begins with the NWMLS collecting suggestions from its members, its forms partners (Washington Realtors and Spokane Realtors) and other industry experts who are involved in the vast majority of real-estate transactions throughout the state.

A committee analyzes the proposed suggestions to determine whether a need actually exists and, if so, how to address it by the creation of a new form or a revision to an existing form.

The second involves creating new forms and revising existing forms to respond to and comply with new legislation or case law.

This process involves industry experts, real-estate attorneys and real-estate brokers.

Under both scenarios, real-estate brokers and real-estate attorneys participate in drafting the forms.

Q: How are NWMLS member agents alerted to new forms?

A: The NWMLS provides notice of any change to its members via e-mail and an announcement posted on its internal Web site.

In the announcement, NWMLS describes the change to its members, the reason for it and the practical and legal effect.

NWMLS offers classes, which are generally taught by real-estate attorneys, to provide instruction regarding the forms.

Q: How do agents generally know which forms are required and which are optional or circumstance-dependent?

A: The state Department of Licensing requires that real-estate agents satisfy certain educational requirements and pass an examination before obtaining a real-estate license.

Agents must also complete a certain amount of continuing education each year to retain their licenses.

Many of the classes offered by the NWMLS — and other real-estate classes that agents can take to meet their education requirements — focus on real-estate forms.

More important, real-estate agents receive significant on-the-job training from their companies, from the broker responsible for supervising the agent and from more experienced real-estate agents in their office.