COP form – Probably the most misunderstood CAR form

I would bet that the COP form (Contingency for Sale of Buyer’s Property) is the least understood, and most improperly used form in the CAR library. The biggest confusion is around just WHAT contingency this form is actually for. I know that it’s right there in the title of the form, the “sale” of the buyer’s property, right? But what does “sale” mean, exactly? Does it mean that the buyer has accepted an offer on their home? Or does it mean that the buyer has closed escrow on their home? There is a BIG difference between these two, obviously. Let’s look at how that impacts the notice provision of the COP form.

Let’s say a seller accepts an offer from a buyer with a COP form and nothing is checked or changed in any section of the COP except that the brokerage name is in Paragraph 3. This means it’s contingent on the buyer entering into contract and closing escrow on their home, and the notice provisions of Paragraph 7 apply immediately. Now let’s say that after a week, the seller receives and signs another offer and gives the first buyer the notice. Since no changes were made to Paragraph 7, the buyer has 2 days to comply or the seller can cancel the contract. The buyer also gets an offer on their home and just before the 2 days are up sends over proof that their home is pending. Phew! Problem solved, right? Not so fast… The agent and buyer are shocked when the listing agent sends over a cancellation form signed by the seller. They cry out, “Hey, you can’t do that! Our home is pending now!” The listing agent points out that COP Paragraph 7.B. states that once the seller notifies the buyer, the buyer has to (i) remove the sale of buyer’s home contingency AND the (ii) loan contingency AND (iii) provide proof that the buyer can close the transaction without selling their home.

Now, what I describe above is technically and contractually correct. However, it’s common business practice to stick with the first buyer once their home goes pending. I’d say this is partly out of many agents not fully understanding what the COP actually says, and partly out of a sense of fair play and good faith. But there may be times when it’s in your seller’s best interests to give the Paragraph 7 notice to a buyer and bump them out of contract, even when the buyer’s home is pending. I know that may sound harsh and unfair (and luckily I’ve never actually had to DO that…), but you would be completely within your rights as spelled out in the COP form to do it.

To prevent hard feelings, if your seller WOULD give this notice even if the buyer’s home is pending, it would be wise to explain to the buyer’s agent that the seller plans to follow the COP form as it’s written. If that’s not acceptable to the buyer, they need to negotiate to where 7.B.(3) is checked, or decline to move forward, or they need to know that they are at risk of getting bumped at any point along the way until closing. [In this last scenario, the buyer’s agent needs to make sure to use the SPRP form on the buyer’s house to prevent them from being homeless. Check back here for a future post on that topic.]