SANTA ANA, Calif. — Gov. Gavin Newsom signed a bill Tuesday limiting real estate contracts between homebuyers and their agents to three months, imposing a time limit on agreements that became mandatory last month under the National Association of Realtors’ commission lawsuit settlement.

The new law will take effect on Jan. 1, making California one of at least 28 states with laws requiring home shoppers to have a buyer-representation agreement with their agents.

Assembly Bill 2992 passed the state Legislature without opposition last month.

The new law requires written consent by both the buyer and the agent for renewing buyer’s representation agreements every three months.

As of August, at least 27 states require such agreements, including Washington and Oregon, according to the California Association of Realtors, which sponsored the bill.

California law requires only sellers to have written agreements with their agents. But the NAR settlement made such agreements mandatory for all buyers working with agents who are members of a Realtor-affiliated “multiple listing service,” a database of homes for sale.

Until the settlement, NAR required sellers to offer to pay both buyer and seller agent commissions. Just four out of every 10 buyers had written agreements with their agents as of 2023, according to a NAR survey.

The new NAR rules makes buyers liable for paying their own real estate commissions, although buyers can ask sellers to cover their share during purchase negotiations.

NAR agreed to the rule changes after losing a $1.8 billion verdict in a federal class-action lawsuit based in Missouri.

AB 2992 was one of 18 consumer protection bills the governor signed on Tuesday.

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