3.1 Georgia Purchase and Sale Agreements
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
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?