 The GAR Contract provides that the contract shall be for the benefit of and binding upon the parties and their heirs, successors, legal representatives, and assigns. Dying does not extinguish the obligation to perform a real estate contract.
In most cases, if it is the seller who passes away, the contract signed is still valid. While the deceased seller cannot sign the closing documents, their estate is responsible for the seller’s obligations and the buyer has the right to take ownership of the property at closing, according to the terms of the contract. Property rights must be determined before the contract can be fulfilled, and upon death, the estate of the deceased must be administered. If a probate process is necessary, the closing could be delayed, especially if it involves tracking down heirs and giving notice. If the buyer is not willing to wait for the probate to finish, which could take weeks or even months, the contract can, in most cases, be terminated and the earnest money will be returned to the buyer. If it is the buyer who dies before closing, the contract they signed is also binding. The buyer’s estate is responsible for contractual duties entered into before their death. Many contracts state that the seller’s only remedy is to keep the earnest money deposit so the seller may not be able to easily enforce the contract against the buyer’s estate. Although it is possible for the seller to file a claim against the buyer’s estate for lost profits, it is rare that a seller is successful in winning a case against the buyer’s estate. Every situation is different so it is recommended that the parties consult with their attorney so they know the best course of action and how they should proceed.
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 In Georgia, here are the most common ways in which you can hold title to property:
Sole Ownership: owned entirely by one person, even if the owner is married. If the person becomes incapacitated due to injury or illness, a spouse or family member typically would need to conduct business with regards to the property. The family member would not be able to do business transactions and they would be unable to act until a court appoints someone to act on behalf of the sole owner. Many people assume if there is a will, it will address the problem, yet a will does not go into effect until after a death and is not in effect if the owner becomes incapacitated. Tenants in Common: allows for two or more people to hold title to real estate with equal rights during their lifetime to enjoy the property. A tenant in common title creates shares of ownership, and those shares will be distributed as directed in a will upon an owner’s death. Upon death, the decedent’s interest passes to his or her heirs named in the will who then become new tenants in common with the other tenants in common. In the absence of a will, the property goes to the heirs of the owner. As a tenant in common, the individual holds title for a respective part of the property and they are at liberty to dispose of said owned property or encumber it at will. The owners of their respective shares are permitted to use their portion of their property as collateral or in financial transactions. They may also have creditors place liens on only their portion of the property. Joint Tenancy: a form of co-ownership where property is owned by two or more persons at the same time in equal shares. Each joint owner has an undivided right to possess the whole property and a proportionate right of equal ownership interest. When one joint tenant dies, his/her interest automatically passes on to the surviving joint tenant(s). This type of title is widespread among but not exclusive to married couples. Unmarried couples may also hold joint tenant title as can parents and their adult children. In the case of a couple, the death of one automatically transfers full ownership to the surviving owner without probate. In the event the surviving owner dies without adding another owner, or if both owners die at the same time, probate is almost certain to occur before the property can go to the heirs. Being a co-owner means that to sell, refinance, or take any action to the property, both owners must agree to the business action. If there is disagreement or in the event your co-owner becomes incapacitated, the court will become involved to resolve the disagreement or to protect the interest of the one who has become incapacitated. Court involvement will occur even in the event the incapacitated owner is your spouse. Joint tenants also expose the property to both co-owners’ obligations and debts. If a creditor successfully sues your co-owner, you could lose your home. A will does not control any jointly owned assets, and you may mistakenly disinherit your family when your co-owner inherits your share, particularly in the case of second marriages with children from a previous union. Trusts: While not technically a form of ownership, you may own real property through a Living Trust. Upon your passing, your interest would pass to successor trustees and/or beneficiaries you have designated in your trust. State laws determine methods of holding and owning title to real estate property. Research should be done to determine the best method to acquire and hold title to real estate in the state you live. Assessing the best way to hold title to property may require the advice of a real estate, legal and/or tax professional.  In a transaction in which the buyer is getting a mortgage, the closing attorney is representing the lender. If there is a dispute between the parties, the closing attorney, acting as Holder, has the same rights and duties of any other holder and holder may disburse the earnest money after 10-day letters and upon a reasonable interpretation of the Agreement.
It gets a bit more complicated when the transaction is all cash. In that event, there is no lender to represent, so the lender is representing either the buyer or the seller. If the transaction is written on GAR forms, the Purchase and Sale Agreement states that the closing attorney in an all-cash transaction represents the buyer. Fiduciary Duty. Unlike Realtors®, who do not own fiduciary duties to clients, attorneys in Georgia do owe fiduciary duties to their clients. Therefore, attorneys must protect the best interest of their client and cannot act against their best interests. If there is a dispute, the closing attorney therefore has a potential conflict of interest. Per the GAR F510, Closing Attorney Acting as Holder of Earnest Money, the closing attorney’s only remedy is to interplead the funds into a court of competent jurisdiction. (GAR F510 p.8). Things happen. The cash buyer could default and the parties can’t come to an agreement regarding the earnest money. The closing attorney is blocked from disbursing funds to the seller because of fiduciary duty. So, the attorney must interplead the funds. Then the parties wait, pay the costs of filing and litigation, possibly lose the interpleader and then pay the other parties costs of litigation. A waste of both client funds and everybody’s time. Here’s the takeaway. If you want to avoid an interpleader in an all-cash transaction, consider NOT naming the closing attorney as the holder of earnest money. Your clients will thank you.  When and how to use Dual Brokerage can be confusing. Let’s break it down.
RMAA Policy Does Not Allow Dual Brokerage First, RMAA policy does not allow dual agency where one Agent represents both parties in a real estate transaction without prior written approval by the Broker. Potential Dual Agency situations can occur when (1) a buyer comes to the listing Agent’s open house, (2) an agent is an on-site builder representative, (3) the listing agent receives a direct solicitation from a potential buyer from a sign-call, ad-call, or other similar contact, or (4) a buyer is interested in a for sale by owner. In situations like 1, 2, and 3, the Associate involved will represent the seller as a client, and in situations like 4, the Associate involved will represent the buyer as a client. The other party in these situations would be treated as a customer, and no dual agency should occur. Should the other party insist on client representation, RMAA’s preferred policy is to assign another agent from our office to work with that party. Any compensation sharing between agents should be agreed upon in writing in advance and a copy should be given to the office. With this preferred policy, different agents affiliated with our office act as Designated Agents to exclusively represent different clients in the same transaction. The office has the right to assign such agents in order to have a designated agency situation rather than dual agency situation. Each agent so assigned shall ensure that they each represent their respective clients in accordance with BRETTA, as well as the respective brokerage agreement. Regarding designated agency, the Company has adopted a policy that the Associate identified in the listing agreement is automatically assigned to represent the seller as a client and that the Associate identified in the Buyer Brokerage Agreement is automatically assigned to represent the buyer as a client. Exceptions for Unique Situations Sometimes the preferred method of Designated Agency is not appropriate. An example would be if the agent has executed client relationships with both the buyer and the seller. That is, a buyer that is looking wants to make an offer on a property listed by the same agent. In that case, an exception can be made so long as one of the Broker Team approves the Dual Agency and both the Buyer and the Seller consent to the Dual Brokerage. Consent to Dual Brokerage is generally not included at the time Brokerage Agreements are entered because it is not an allowed type of agency allowed by RMAA. Therefore, both the Buyer and Listing Brokerage Agreements would have to be amended for the clients to give informed consent to Dual Brokerage. Do It Right NAR’s Code of Ethics and Standards of Practice offers guidance for conducting a lawful and ethical dual agent transaction. Articles 1-12 and 1-13 state that agents should discuss with clients even the potential of circumstances for a dual agency situation to arise, well before it ever does. Because the RMAA policy is not to use dual representation, it should be discussed as a unique situation that requires additional permission from the RMAA Broker Team and marked on the Brokerage Agreement as an agency that RMAA does not offer. However, if it is required in those limited circumstances, the Brokerage Agreements can be amended to include it. Disclose, Disclose, Disclose. Disclose everything you can, to both sides, so they know exactly what you can and cannot do in a Dual Agency. The GAR Brokerage Agreements include specific language that should be discussed with the client: Dual Agency Language in the GAR Agreements The GAR language includes that the client is aware that Broker is acting as a dual agent in this transaction and hereby consents to the same. The client must be advised that: (1) In serving as a dual agent, Broker is representing two parties, the seller and the buyer, as clients whose interests are or at times could be different or even adverse; (2) Broker will disclose all adverse, material facts relevant to the transaction and actually known to the dual agent to all parties in the transaction except for information made confidential by request or instructions from either party which is not otherwise required to be disclosed by law; (3) The client does not have to consent to dual agency. The consent of the Client to dual agency has been given voluntarily and the client has read and understands the agreement. (4) Notwithstanding any provision to the contrary contained herein, the client hereby directs Broker, while acting as a dual agent, to keep confidential and not reveal to the other party any information which could materially and adversely affect their negotiating position except as required by law. (5) Broker or Broker’s affiliated licensees will timely disclose to each party the nature of any material relationship with other party other than that incidental to the transaction. A material relationship shall mean any actually known personal, familial, or business relationship between Broker and a party which would impair the ability of Broker to exercise fair and independent judgment relative to another client. The other party whom Broker may represent in the event of dual agency may not be identified at the time the client enters into this agreement. If any party is identified after the agreement and has a material relationship with Broker, then Broker shall timely provide to the client a disclosure of the nature of such relationship. (6) Upon signing this brokerage engagement with the dual agency disclosures contained herein, Seller’s consent to dual agency is conclusively deemed to have been given and informed in accordance with state law, provided that the client has consented to Broker acting in a dual agency capacity. Confidentiality Must Be Maintained The RMAA Policy on Confidentiality follows BRETTA. As required by the Brokerage Relationships in Real Estate Transactions Act (BRETTA), Associates must maintain confidentiality of all personal and financial information and other matters identified as confidential by the client unless otherwise required by law or if the buyer permits disclosure of the information by subsequent word or conduct. An Associate should treat as confidential any information provided by the client that may reasonably be expected to have a negative impact on the client’s real estate activity. Licensees should pay attention not to make unauthorized or offhand comments about a client's situation or property in a way which could be considered a violation of the duty of confidentiality. Four areas considered of importance are:
Publicly Available Information is Not Confidential Agents can still counsel their clients based on publicly available information. If information is in a public record, or it’s anything that the buyer or seller says can be shared, then that information is not confidential. Confidentiality Can Be Hard! Buyers and Sellers can be relentless! They’ll beg you to reveal the other side’s position. If the information is confidential, you can’t do it! |
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