Key Takeaways
- The GAR (Georgia Association of REALTORS) Purchase and Sale Agreement is the standard contract form used in Georgia
- Georgia requires earnest money to be deposited within 5 banking days per the GAR contract
- Time is of the essence clauses are standard in Georgia contracts, making deadlines strictly enforceable
- The Georgia contract allows for due diligence periods, financing contingencies, and inspection contingencies
- Closing in Georgia typically uses attorneys who conduct the title examination and closing
Georgia Purchase and Sale Agreements
Important: This content covers Georgia-specific contract law. You should complete the National Real Estate Exam Prep first, as general contract principles are tested on the national portion.
Real estate contracts in Georgia must meet all standard contract requirements plus Georgia-specific provisions.
Standard Contract Requirements
For a valid Georgia real estate contract:
| Requirement | Description |
|---|---|
| Competent Parties | Legal age (18+) and mental capacity |
| Offer and Acceptance | Meeting of the minds |
| Legal Purpose | Transaction must be lawful |
| Consideration | Something of value exchanged |
| Written Form | Statute of Frauds requires writing |
| Legal Description | Property must be identifiable |
The GAR Purchase and Sale Agreement
The Georgia Association of REALTORS (GAR) provides standard forms used in most residential transactions:
Key GAR Form Provisions
| Section | Purpose |
|---|---|
| Purchase Price | Total price and payment terms |
| Earnest Money | Amount, holder, and deposit timeline |
| Financing | Loan type, amount, and contingency |
| Due Diligence | Inspection period and rights |
| Closing | Date, location, and costs |
| Special Stipulations | Additional negotiated terms |
Earnest Money Requirements
Per the GAR contract and GREC regulations:
- Must be deposited within 5 banking days of binding agreement (per GAR)
- GREC requires deposit within 3 banking days (regulatory requirement)
- Held in broker's trust account or attorney escrow
- Amount is negotiable between parties
Exam Tip: The GAR contract allows 5 banking days, but GREC regulations technically require deposit within 3 banking days. On the exam, follow GREC's 3-day rule unless specifically referencing the GAR form.
Key Contract Provisions
Time is of the Essence
Georgia contracts typically include a "time is of the essence" clause, meaning:
- All deadlines are strictly enforceable
- Missing a deadline can be grounds for default
- Extensions must be in writing and agreed by all parties
Due Diligence Period
The due diligence period allows the buyer to:
- Inspect the property
- Review HOA documents
- Verify zoning and permits
- Conduct surveys
- Terminate for any reason (typically)
If buyer terminates during due diligence, earnest money is usually returned.
Financing Contingency
The financing contingency protects the buyer if:
- Loan application is denied
- Loan terms change significantly
- Appraisal comes in below purchase price
Buyer must apply for financing within specified days and diligently pursue approval.
Inspection Contingency
Separate from due diligence, inspection contingencies may allow:
- Negotiation of repairs
- Price reduction requests
- Termination for significant defects
Contract Amendments
Changes to the contract after signing require:
| Change Type | Method |
|---|---|
| Minor changes before acceptance | Counter-offer or amendment |
| Changes after binding agreement | Written amendment signed by all parties |
| Extension of deadlines | Amendment to the contract |
| Price changes | Amendment with new terms |
When the Contract Becomes Binding
A Georgia purchase contract becomes binding when:
- All parties have signed
- Acceptance is communicated to the other party
- Delivery of acceptance is completed
Note: Georgia follows the "mailbox rule" for acceptance—acceptance is effective when sent/dispatched, not when received.
According to GREC regulations, earnest money must be deposited within how many banking days?
What does "time is of the essence" mean in a Georgia real estate contract?