What’s a Georgia Purchase and Sale Agreement?
A Georgia Purchase and Sale Agreement, often referred to as the PSA, is a legal document that outlines the terms and conditions of a real estate transaction in Georgia. It is a formal contract between a seller and a buyer that details the responsibilities of each party and serves as a legally binding agreement that holds both the buyer and seller accountable for their commitments to one another . A Georgia Purchase and Sale Agreement typically includes the legal description of the property being sold, the price and terms, contingencies, closing costs, and other purchase terms. As with many agreements in real estate, the specifics can vary based on the unique transaction, but generally speaking, a Georgia Purchase and Sale Agreement is a critical component that lays the groundwork for a successful closing and a smooth transfer of ownership from the seller to the buyer.
Key Essentials in a Georgia Purchase and Sale Agreement
The Georgia purchase and sale agreement PDF is a relatively straightforward document that incorporates some underlying legal issues. From the buyer’s perspective, the major issues are price, financing, and making sure that no liens cloud the title. In addition, in the instance of an Owner Financing deal (which we at Capstone Realty Investors pride ourselves on) there are terms to cover the owner hold back. For the seller of the residential property, the major points of concern are above, plus the condition of the property, closing costs, and possession of the property. Typically, the Georgia purchase and sale agreement would include the legal description of the property (i.e.; "Lot XXX, That Lot in Gwinnett whose street address is Xxx), the Purchase Price (i.e.; "200,000.00") and the Financing Details (i.e.; "100% LTV Owner Financing with Monthly Payments of 1,200.00.") In addition to the basic components of a Georgia purchase and sale agreement, the lender’s information must be included. Typically it will state the name of the lender, a preliminary estimated closing statement (or settlement statement, or HUD-1A) from the lender’s settlement attorney, and the estimated closing date. Closings are typically set two weeks from the date of the signed purchase and sale agreement. If you are using a real estate attorney your attorney will schedule the settlement and coordinate with the other parties involved in the transaction. Possession of the property by the purchaser is generally upon payment of the funds. If the seller seeks to limit this, he must insert a Rentback Clause in the terms of the purchase and sale agreement. Inspection clauses require the buyer to examine the property for any defects and to inform the seller of these defects at least five business days prior to the closing date. Closing time periods generally range from seven to thirty-five days. Contingency clauses are those stipulations that void the contract if a particular event does not occur. It can be anything from obtaining financing to inspection faults to the absence of a lien on the property.
How to Get a Georgia Purchase and Sale Agreement PDF
To obtain a Georgia Purchase and Sale Agreement PDF, look closely to see if the agreement or form is referenced in the Real Estate and forms sections of the Georgia Association of Realtors website. The state association of Realtors sometimes places a free pdf copy there for use by Georgia real estate agents. Some states also utilize online real estate data banks where users may purchase forms or contracts such as the Georgia forms bank hosted by District of Columbia based database provider LexisNexis. LexisNexis requires registration and charges an annual subscription for access to its database of forms and contract. Some real estate lawyers offer these forms under their own name through their websites or blogs. State bar associations sometimes maintain a form bank for their members, but the forms are not as easy to find as those on the state association of Realtors. (Get it? Lawyers fear the competition, that’s why you rarely see the Georgia Bar or Atlanta Bar offering their own forms.) Harold "Howie" Huckeby III, owner of Howie Huckeby & Associates has authored a series of Georgia Attorney Forms designed for agents and brokers. He offers his forms for download as pdf’s on his attorney website. Some attorneys who handle residential closings do offer their own forms within their websites or blogs. Many times, these forms are free for downloading. (See wikiHow "Retrieve the Purchase Agreement".)
Legal Considerations of Georgia Purchase and Sale Agreements
In Georgia, the basic legal requirements for a legally enforceable purchase and sale agreement include a competent seller, legal capacity of the buyer and the seller, the identification of the property, the price and manner of payment. If there is a mortgage on the property, the purchaser has to agree to take subject to the existing mortgage. Georgia’s Statute of Frauds requires contracts for the sale of real property to be in writing in order to be enforceable. As with all legal documents, all parties should seek proper legal counsel or advice from an attorney before signing. The attorney can review the document for compliance with Georgia state laws and other county and local rules based on the specific deal. More specifically, the following disclosures and conditions may make for an unenforceable purchase and sale agreement: · Uninformed consent – each party must have a clear understanding of the agreement; · Fraud, misrepresentation or mistake in the transaction; · Lack of competence – for example, the contracting individuals under the age of eighteen. · Capacity – This refers to the ability of a buyer or seller to enter a contract. For the contract to be legal, the parties involved must have legal capacity, meaning they are of sound mind and of legal age. Age of consent is eighteen in Georgia; however, a minor may enter into an enforceable contract if his or her parents are also responsible for purchasing the property. · Involuntary action – the party did not voluntarily enter the deal and was instead forced to do so against their will. Due to the complex nature of real estate contracts and the consequences that arise when the agreements are not properly executed, an attorney should be retained to draft and execute Georgia Purchase and Sale Agreements.
Common Errors to Watch Out For
Common mistakes to avoid in a Georgia Purchase and Sale Agreement
Signing before read the whole contract: A seller may want to sign the offer as soon as they see a Decimal Point in the purchase price, but do your due diligence and read the whole thing. We see this mistake all the time.
Not giving notice of the necessary repairs by the Repair Deadline that’s set forth in the contract can be a huge mistake. If you don’t get the repairs you want addressed by the deadline, you are stuck with making them yourself. The initial offer may say that the buyer can terminate if they lose financing, but the contract says if no financing is sought, the buyer can’t object to the condition of the property . These are the types of things you need to look for and be careful of!
Repair Requests: Be careful not to make any oral repair requests of the buyer or seller. Make all repair requests in writing and even then, don’t expect them to be taken seriously. Better yet, also include a due date and dollar amount on all repair requests. Additionally, be sure not to allow the seller to enter the property for an inspection. You can do your own or have your agent or buyer’s agent do them for you.
Getting it wrong with the closing attorney. You heard it from your buddy at the bar that you don’t need to have your attorney review the contract, but stop and take a moment to think it through. If the title is a mess or there are clouds on the title, an ounce of prevention is worth a pound of cure. A good attorney can save you thousands later.
The Work of Real Estate Agents and Attorneys
The Georgia Purchase and Sale Agreement PDF is a legally binding contract between the prospective buyer and seller of real property. That may seem simple, but it is important to understand that there are generally two forms that the agreement can take: the exclusive right to sell listing agreement, and the one-to-four family residential condominium contract. Some of the language under these contracts may be tough to understand for someone without a legal background. This is why it is important to include a professional when preparing or reviewing your Purchase and Sale Agreement.
The Georgia Purchase and Sale Agreement is designed to protect both the buyer and the seller. It achieves this by setting clear terms and conditions, so as to limit misunderstandings between the two parties. Therefore, if you ever have any problems with the other party or the legal language written in the contract, you will need a professional who understands how to deal with such issues. Usually, that party will be a real estate agent or a real estate attorney. However, for very basic real estate transactions, most people prefer to leave the work to an agent, unless of course, they want it done on their own.
However, before seeking legal advice from an attorney, it is best to try and discuss these matters with your real estate agent. Real estate agents are experts at interpreting the Georgia Purchase and Sale Agreement and should be well-informed of the laws relating to Georgia real estate and contract law. It is their job to handle issues arising from the purchase and sale of residential real estate, and therefore, their knowledge of the law is crucial.
If an agent cannot find a solution to the problem or if they are not properly addressing your concerns, then it is in your best interest to seek advice from a qualified real estate attorney. A good attorney will be well-versed in handling Georgia real estate issues and can ensure that your interests are always protected.
In summary, until there is an issue with the Georgia Purchase and Sale Agreement, it is best to consult with a real estate agent. However, be sure that the person acting as your real estate agent is licensed and has a good reputation in the community. Otherwise, you could easily end up having to hire an attorney to help you interpret the Georgia Purchase and Sale Agreement and to protect your interests.
Georgia Purchase and Sale Agreement FAQ
I have studied the Georgia Purchase and Sale Agreement (also known as the GAR Purchase Contract for real estate purchases) and have written a detailed article about it called "The Ultimate Breakdown of the Georgia Purchase and Sale Agreement PDF." I get a lot of questions about the Purchase and Sale Agreement, so I decided to write a FAQ for The Ultimate Breakdown of the Georgia Purchase and Sale Agreement PDF.
How much earnest money do I need to pay?
There are no requirements for earnest money. You need to provide enough earnest money that the Seller wants to do the deal. In hot markets more earnest money is required and in lower demand markets less earnest money is required. We see deals with $100 earnest money, $500 earnest money, $1000 earnest money, $2000 earnest money all the way up to $10,000 in earnest money.
Any earnest money over $1000 should be wired and all earnest money in the form of an official check, certified check or wire transfer. This is because most agents and brokers tie up their personal checks to open up escrows and we want to insure that we have good funds.
What are the most common contingencies?
The most common contingencies are loan approval and inspections. Other common contingencies are sale of the buyer’s property and sale of the home the buyer is living in. These first two contingencies are usually loan contingency and home inspection contingency. More on that here.
What contingencies can I back out for?
You can back out of a deal for any contingency, but you may lose your earnest money deposit . For example, if you had a loan contingency and you could not qualify for a mortgage, your lender should provide you a letter stating that you were denied and you should be able to get your earnest money back. For your home inspection you should be able to get your earnest money back if you use Paragraph 14 and Paragraph 3 of the GAR Purchase and Sale Agreement properly. Paragraph 14 is the Home Inspection Provision that lists what you need to provide if you back out during a due diligence period. And Paragraph 3 is the right to ask for repairs.
After I am declined on my home loan, how long do I have to provide my lender letter to get my earnest money back?
If Paragraph 21 of your listing agreement is set up for the Buyer to have the loan contingency period expiration date…then you have until the end of that day to provide your lender letter. If Paragraph 21 of your listing agreement is set up for the Seller to have the loan contingency period expiration date…then you have until the end of that day to provide your lender letter.
Do I have to give the seller a reason for why I am backing out by exercising Paragraph 14 and Paragraph 3?
Technically, you must provide the sellers with a reason. We provide the reason anyway. It is important to keep in mind that the more professional and fair you are about it…the more you will likely be able to make a deal with the seller to pay for your repairs and to keep the deal alive. The less professional and fair you are, the less likely you are to keep the deal alive.