This article discusses the real estate transaction.
Under Georgia law, a purchase and sale agreement must follow a form and contain certain elements for the contract to be legally binding. Although the Georgia Association of Realtors’ contract is commonly used by licensed brokers in the Atlanta market, other agreements are also acceptable as long as they meet the state’s requirements. The contract must include the names of all parties in the contract, including the spouse, and the legal description of the property.
To avoid any surprises, both buyers and sellers need to understand their respective duties under each section of the real estate transaction agreement. The following are five of the contact’s most important clauses:
Purchase price and method of payment
This section discloses the terms and conditions that the purchaser is seeking for the loan. It also notifies the seller that the buyer will attempt to obtain a bank loan that adheres to guidelines for standard financing. Furthermore, it specifies that the contract depends upon the buyer obtaining financing as described. If the purchaser doesn’t get the loan, he or she can cancel the contract and receive a full refund of the “earnest” money, which is the money paid to show the buyer’s good faith.
Typically, brokers advise their clients on how much earnest money to submit with the real estate transaction purchase offer. The contract spells out the deposition of the funds. If the buyer and seller cannot reach a mutually satisfactory agreement — such as the buyer not being able to obtain financing — the earnest money deposit must be returned.
Closing and possession
This part contains language on closing the transaction and turning the property over to the buyer. The Georgia Association of Realtors contract has a preprinted seven-day extension that allows either party to unilaterally extend the closing date. Only qualifiers named in the contract, such as the seller using the extension to clear the title to the property, are acceptable.
Condition of property
This paragraph stipulates that except for normal wear and tear, the condition of the property must be the same on the closing date as it was on the day of the agreement. If the property is damaged, the buyer has three options: wait until the seller settles the insurance claim and makes the repairs; accept the insurance proceeds and close the deal, if the bank agrees; or cancel the contract and get all the earnest money back.
Title of property
This provision authorizes the buyer’s representative to perform a title search to determine if there are any claims against the property. The buyer must be able to insure the title at regular rates. Mortgage lenders require borrowers to obtain title insurance for the amount of the loan, which protects the bank’s interest.
This document has several other clauses relating to things such as termites, tax prorations, seller’s property disclosure, inspection and agency and brokerage. Consult with your Duffy broker or attorney to ensure you grasp the meaning and consequences of all paragraphs in your purchase and sale agreement.
I trust you enjoyed this article about the real estate transaction.
Image source: Wikimedia Commons