What is the 8-Day Unilateral Extension?
The 8-day unilateral extension is a provision in the GAR® purchase and sale agreement where the buyer or seller may unilaterally extend the Closing Date for eight (8) days upon notice to the other party given prior to or on the date of closing. This means that one party can decide to extend the closing date by eight days without the need for the other party’s agreement. When Can This Extension Be Used? There are three main scenarios where the unilateral extension can be used:
The 8-day unilateral extension CANNOT be used if the delay is caused by the buyer.
0 Comments
New LBP GAR Form: Buyer’s Agent must inform the Seller about their lead-based paint obligations if they are paid by the Seller. According to the definition of Agent under the federal regulation, this would include Agents who are paid cooperatively from the Seller’s Broker. The definition of Agent under the regulation includes Agents who are paid cooperatively from the Seller's Broker. We are recommending that the LBP pamphlet be sent with the offer, or the following special stipulation included in the offer to satisfy the requirement. (This stip is now in the RMAA office stips in Remine and can be added to your offer):
Under 42 U.S.C. § 4852(d), Buyers’ Agent hereby notifies Seller that Federal law requires you to provide certain important information about Lead-Based Paint (LBP) and/or Lead Based Paint Hazards (LBPH) before a prospective buyer is obligated under a contract to purchase your home if your any portion of your home, including, without limitation, fixtures and installed cosmetic elements, was before 1978. Sellers must provide, as part of the contract process, the Protect Your Family From Lead In Your Home pamphlet, complete and attach to contract the Lead Based Paint Exhibit including confirmation that you have complied with all notification requirements, and provide a 10-day period to conduct a paint inspection or risk assessment for LBP or LBPH. Contact the Broker Team with questions regarding the LBP disclosure changes or any of the 2024 Mid-year GAR Contract changes. The answer is yes unless the client has waived this obligation in writing.
Regardless of whether they are representing sellers, landlords, buyers, or tenants, brokers must present all offers to their client in a timely fashion. This requirement is consistent with Georgia real estate license laws, which also require licensees to “deliver within a reasonable time” all offers to buy or sell, as well as any completed purchase agreements. Brokers must also present to the other party all offers that their client desires to submit, even when the broker disagrees with some or all the provisions in the offer. A listing broker’s duties to the seller are established in the Seller Brokerage Engagement Agreement. Among other duties, there is a clearly defined duty to timely present all offers to and from the Seller, even when Property is subject to a Contract to Sell. (F101 Seller Brokerage Engagement Agreement Section 7.(a)(2). Even when a seller’s or landlord’s property is under a contract to sell or lease, the broker must still submit additional offers to the broker’s client. Likewise, a broker representing a buyer or tenant must submit to the seller any offers or counteroffers that the client wishes to make, even if the buyer or tenant is already a party to a sales contract or to a lease (or letter of intent to lease). Interestingly, the obligation to timely submit all offers likely extends to oral offers, even though contracts for the purchase or real estate must generally be in writing to be enforceable. The obligation to present all offers, even after the property is subject to an offer to sell, is also included in the Code of Ethics Article 1 Duties to Clients and Customers. Standard of Practice 1-7. When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counteroffers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide, as soon as practical, a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/landlord has waived the obligation to have the offer presented. The only way the listing agent is relieved of this obligation is if the seller has waived the obligation in writing. Reference: The Red Book on Real Estate Contracts in Georgia 6 th Edition, Seth Weissman Code of Ethics Article 1 Duties to Clients and Customers More and more, we are seeing Temporary Occupancy Agreements (GAR F219) so sellers can remain in their properties post-closing. Here are a few tips for navigating the form.
The Terms in the Temporary Occupancy Exhibit Control Over the Terms in the Agreement The temporary occupancy exhibit includes language that states if there is a conflict between the exhibit and the agreement, the terms in the exhibit shall prevail. If you include a special stip in the temporary occupancy exhibit and counter that stip in the counteroffer, best practice is to remove the stip or strike through it. Temporary Occupancy Exhibit (F219), Paragraph 13: In the event there is a conflict between the terms and conditions of the Agreement and this Exhibit, the terms and conditions contained in this Exhibit shall prevail. Seller is Required to Provide Buyer with One Set of Keys at Closing Often, sellers do not want to give the buyer keys at closing since they are still occupying the property. Remind the seller at the time of contract that they are legally required to turn over one set of keys at closing. Temporary Occupancy Exhibit (F219), Paragraph 2: At the time of closing, Seller shall provide Buyer with one set of keys, door openers, fobs, access cards, codes and other similar equipment needed to access the Property, the community and community amenities. Not later than the time of possession, Seller shall turn over all remaining keys, door openers, fobs, access cards, codes and other similar equipment needed to access the Property in Seller’s possession to Buyer. Maximum Temporary Occupancy is 60 Days The GAR Temporary Occupancy Agreement is designed to cover the Seller remaining in the property for up to 60 days. If the Seller needs longer than 60 days, a lease should be used. The reason is that, if the buyer has purchased as an owner occupant, lenders consider 60 days the cut off for determining whether the owner is an owner occupant or an investor. If the lender determines that the new owner is actually an investor, the new owner would be in default of the loan. The interest rate could increase or, worse, the owner could be accused of mortgage fraud. Tip: Don’t allow a post-closing occupancy to be more than 60 days. Use a lease form if the seller requires more than a 60 day occupancy. More than 60 days may not work if the new owner will be an occupant. Watch Out for Insurance Issues Once ownership of a property changes, insurance coverage changes too. The seller’s owner occupant policy no longer covers the seller. The buyer is now the owner. If there is a flood or a fire, the new owner’s policy covers the real estate, but not the seller’s personal property. Tip: Make sure the seller contacts his insurance carrier for advice regarding personal property coverage during the temporary occupancy. The New Owner is Responsible for Maintenance and Repairs Once the closing takes place, the new owner is responsible for the maintenance and repair of the property. The previous owner is not. The old owner is just a tenant. Unless the old owner has damaged the property beyond normal wear and tear, they are only responsible for their own personal property. Tip: Advise your buyers, before they agree to a seller remaining in the property post-closing, that they are responsible for the maintenance and repair of the property post-closing. The New Owner has the Right to Enter the Property at Reasonable Times with Notice Buyers and/or buyer’s representatives have the right to enter the property to inspect, examine, survey, meet contractors and prepare for the buyer’s occupancy. Temporary Occupancy Exhibit (F219), Paragraph 10: Upon prior notice to Seller, Buyer and/or Buyer’s representatives shall have the right to enter the Property at Buyer’s expense and at reasonable times to inspect, examine, survey, meet contractors and prepare for Buyer occupancy of Property. Seller shall cause all utilities, systems and equipment to be on so that Buyer may complete all inspections. Buyer agrees to hold Seller and all Brokers harmless from all claims, injuries and damages relating to the exercise of these rights and shall promptly restore any portion of the Property damaged or disturbed from testing or other evaluations to a condition equal to or better than the condition it was in prior to such testing or evaluation. Make a Hold Over Period Hurt Once the agreed upon temporary occupancy has terminated, a seller that remains in the property is holding over. If the seller doesn’t leave voluntarily, the new owner may have to evict. Evictions cost time and lots of money. Therefore, make the daily cost of holding over a significant one. If the daily cost is minimal, the seller has no incentive to leave. Tip: Include a large per day hold-over fee. Make it hurt. $500 or $1000/day would incentivize a seller to leave on time a lot more than a small fee. Is it legal for a seller to have a recording device during open houses and showings? The answer is “Yes”
The general rule in Georgia is that a property owner has the right to “record the activities of persons who are on the property or an approach thereto in areas where there is no reasonable expectation of privacy,” and to conduct surveillance “within the curtilage of (their) residence”. Ga. Code Ann. 16-11-62(2)(B), (C). Therefore, a seller is perfectly within his or her legal rights to install and use camera and audio recording devices throughout his or her property as he or she sees fit, including watching potential buyers as they tour the property. (The Red Book, Ch 1) The two categories of surveillance are audio and video, and the rules about them are very different. Audio Surveillance. Did one of the parties consent? In Georgia, as long as one of the parties to a conversation knows that they are recording, then an audio recording is ok. What is not allowed is for a third party to record a conversation between two people who are unaware they are being recorded. So, an audio recording would be legal if the home seller is recording and is accompanying the buyer. But that’s not the way it usually happens. In the more common scenario, the only ones monitored are the house hunter and his or her broker, both unsuspecting. In most cases, an audio recording of a broker and buyer without the seller present would be illegal. Video Surveillance. Is there an expectation of privacy? Video is different. A video recording is legal if the party being recorded did not have a reasonable expectation of privacy. So, unless consented to, a video in one’s own home would likely be illegal, because there is an expectation of privacy. However, a video recording in a private residence in a listed house may be legal, since an individual may not claim an expectation of privacy. (Except in a bathroom.) Listing Brokers Good Practice – Disclose the presence of cameras NAR recommends that listing brokers should know whether surveillance devices are present on the property, so, first, ask your Seller. Second, to avoid any later claims that illegal recordings were made, listing brokers should share this knowledge. Either post a notice on the property alerting all visitors to the property that they may be recorded or include the information in the MLS comment fields – or do both. Some regional Realtors' groups now require home sellers to inform their brokers of any surveillance equipment as part of standard broker contracts. Buyer Brokers – Curb Your Enthusiasm! An audio recording of a buyer or broker comments – even an illegal recording – can affect negotiations. Assume a recording device is there or pretend the Owner is right there with you and don’t make any comments that you wouldn’t want the Owner to hear. Comments like “This is my first choice” or “Love, love, love this house” are not for the Owner’s ears! Make sure your clients are aware of recording devices, if you know they exist. Consider making this disclosure in writing, such as in an email. While such a disclosure is not legally required since the buyer’s representative is not the one making the recording, it would help protect them from any later allegations if a client later claimed to be unaware of a disclosed recording device. What happens if the buyer does not complete the terms of the loan on the financing contingency?5/30/2024 If the terms of the financing contingency are not complete or defined in the finance contingency exhibit, the contract could be unenforceable. This would include using “TBD” for the terms. Appellate courts of Georgia have consistently held that such a contract is too vague and indefinite to be enforced. See case below from GA Court of Appeals.
Court of Appeals of Georgia – PARKS v. THOMPSON BUILDERS, INC. (2009) 1. We hold that the trial court did not err here in finding as a matter of law that the contract was unenforceable. The contract did not list the loan amount or the interest rate on the loan. “The appellate courts of Georgia have consistently held that such a contract is too vague and indefinite to be enforced since the failure to specify at what rate the buyer is to obtain a mortgage loan causes a failure of a condition precedent to the enforceability of the contract.” (Citations omitted.) Homler v. Malas, 229 Ga.App. 390, 391, 494 S.E.2d 18 (1997). The same would hold true for the failure to specify the amount of the loan. See, e.g., Denton v. Hogge, 208 Ga.App. 734, 734-735(2), 431 S.E.2d 728 (1993) (contract too vague where loan not identified and contract states only that “purchaser [is] to apply for assumption of loan”). The court therefore did not err in granting Thompson Builder’s motion for directed verdict on this ground. In addition to the contract being unenforceable, the licensee could be fined $500 for not including loan terms in a purchase contract. See Rule 520-1-14 Citations 3(b): (3) Schedule of Violations and Penalties. Violation of the following rules, regulations, and unfair trade practices may become the basis for the issuance of a citation. While the Commission may determine that circumstances warrant the imposition of a lesser penalty, the monetary penalties prescribed constitute the maximum penalty for a single violation of the cited rule, regulation, or unfair trade practice. In the event of any conflict between the description of a violation in the schedule below and the language in the code section or rule, the language in the code section or rule shall control. (a) Failure of a community association manager, salesperson, or associate broker to turn over trust funds to the broker as soon as practicably possible. 43-40-25(b)(23) & 520-1-.08. Fine of $500.00. (b) Failure of a licensee to include financing terms in a sales contract having a financing contingency. 43-40-25.1. Fine of $500.00. For more information: https://rules.sos.ga.gov/GAC/520-1-.14?urlRedirected=yes&data=admin&lookingfor=520-1-.14 The GAR Purchase and Sale Agreement gives the buyer and the buyer’s agents the right to enter and to thoroughly inspect, examine, test, and survey the property under contract. This right exists regardless of whether the property is being sold “as is,” subject to a due diligence period, or with a right to request repair of defects. The right to inspect has to be exercised at reasonable times and exists up to the time of closing. The buyer not only has a right to inspect the property, but under the doctrine of caveat emptor (buyer beware), also has a duty to do so. The underlying principle of law is that the buyer cannot claim that he has been deceived by false misrepresentations about defects that the buyer could have discovered.
Multiple Inspections If the discovery of a condition would cause a reasonably prudent buyer to investigate further, the buyer is under an obligation to investigate further. There are a lot of situations that might require a further investigation: mold, termites, ceiling stains, even a blocked passage. Consider the situation of a burst pipe after the initial inspection. The seller repairs the pipe and repairs the sheetrock. The seller must inform the buyer of the change in condition (the burst pipe and repair) and the Seller Property Disclosure would need to be updated to reflect the condition and repair. The buyer has the right to reinspect to evaluate the repair but is also responsible for the cost of repair following the reinspection. So long as the seller repairs the burst pipe and delivers the property in the same or better condition as it was on the offer date, the seller has fulfilled its obligation. Does the Buyer Have to Hire A Professional Inspector? There is no legal duty for a buyer to hire a professional home inspector or to hire an inspector at all. However, the failure to retain a professional home inspector can be used as a defense against a purchaser who subsequently discovers damage to the property. The argument is that the buyer failed to exercise due diligence by not retaining a professional. Remember, Georgia is a Buyer Beware state. Language Change for Buyer’s Payment of the Cost of Inspection Damage If the property suffers damage by the inspection, the buyer is also required to pay for the repair of any damage to the property caused by the inspection. This section previously provided that: “Buyer agrees to hold Seller and all Brokers harmless from all claims, injuries and damages relating to the exercise of these rights and shall promptly restore any portion of the Property damaged or disturbed from testing or other evaluations to a condition equal to or better than the condition it was in prior to such testing or evaluation.” This section was revised so that the buyer, rather than actually restoring the property damaged in an inspection, agrees to pay to seller the actual cost to restore the damage. This change was made so that the seller could control the repairs being made to the seller’s property. In addition, the entire section was added in a boldface font so that the buyer’s indemnification obligations are now very prominent. By doing this, it will also make it harder for buyers to argue that they did not see this section and should therefore not be bound by it. This indemnification obligation shall not apply to damage resulting from defects in the Property uncovered during the inspection of the Property. Reference: Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (p. 821-836). BookBaby. Kindle Edition. NAR’S 2023 PROFILE OF HOME BUYERS & SELLERS – Be the expert and leverage the data provided!5/13/2024 NAR releases some great data every year in their Profile of Home Buyers & Sellers. Here’s how to leverage that data… Sure, homeowners can try selling their homes on their own, but let’s face it: unless they’ve secretly mastered the real estate market overnight, they're likely leaving a hefty chunk of change on the table. Homes agents handle fetch around $405,000 on average, while those FSBO adventures? They average about $310,000. That's nearly $100k that could have been in their pockets. That’s not just a small difference—it’s a new luxury car or a year’s college tuition kind of difference! We live in a country that spends over $52 billion per year on lawn care. Consumers want the easy button, a seasoned pro who can navigate these tricky tides and ensure the sale doesn't just go through but that it sticks the landing financially and legally. So, when you roll out your pitch, don’t just talk about putting up signs and hosting open houses (maybe). Tell them about the real stuff—maximizing their sale price through expert marketing, deep market knowledge, and airtight compliance with the latest laws. You’re not just selling a service; it’s financial security, legal assurance, and, yes, a heck of a lot less stress. Isn’t that worth more than just a handshake and a smile? Here is a link to the NAR Profile: https://cdn.nar.realtor/sites/default/files/documents/2023-profile-of-home-buyers-and-sellers-highlights-11-13-2023.pdf?_gl=1*5i4rar*_gcl_au*MTgyNTk5MDI3Ny4xNzE1MjcxODYx The following two forms must be executed and included with the
contract: 1. GAR Form F510 – Closing Attorney Acting as Holder of Earnest Money Exhibit. This document specifies who the closing attorney is with their contact information. It also includes a section to name an alternate holder who must be a broker. It is very important to name an alternate holder in case the closing attorney does not timely agree to be the holder. Otherwise, there would not be a contractual holder of the earnest money to enforce the terms of the agreement should the earnest money not be delivered or if there is an earnest money dispute. 2. GAR Form F511 – Agreement of Closing Attorney to Serve as Holder of Earnest Money (“Escrow Agreement”). The Buyer’s agent must deliver the fully executed purchase and sale agreement and Escrow Agreement (F511) to the attorney within two days of the binding agreement date. The closing attorney must agree to become the holder within five business days of receiving the entire contract. Important to remember:
If the closing attorney does not agree to become the holder of the earnest money within five business days, the alternate holder automatically becomes the holder.
when it has been done.
to the contract as an exhibit and initialed by both parties. The F511 also needs to be completed and agreed to by the closing attorney and provided to all parties.
funds, the closing attorney shall not disburse the funds based upon a reasonable interpretation of the agreement. The only remedy available to the closing attorney shall be to interplead the funds into a court of competent jurisdiction. We recommend that you have RMAA hold earnest money whenever possible, so we have greater control over compliance and notices. Listing content fuels the real estate industry and displaying photographs of real properties online is now a vital part of the real estate professional’s marketing plan. Sellers use photographs to market properties, and buyers rely on those images to select which properties to visit. MLSs distribute property listings through proprietary databases that include the listing photographs. Moreover, MLSs in turn often license their property listing databases, including broker-provided photographs, to third-party portals, such as realtor.com®, and other websites and vendors.
Improper use of listing photographs, however, can create legal problems for agents, brokerages and MLSs. Authorship and ownership of photographs within the real estate industry is “fractured”. Who authored the photograph and who can use what photograph and in what way varies across the industry. Listing photographs may be taken by homeowners, real estate agents, MLS or brokerage employees, or professional photographers. Photographs may be owned or licensed to different parties in a variety of ways. A misunderstanding of how you may use the photographs for property listings could make you vulnerable to a copyright lawsuit. It is crucial to know what rights you own in photographs and how those rights permit you to use the photographs. To reduce your risk of copyright infringement, you should:
Work for Hire Agreement: This sample agreement provides that the commissioned photographs are a “Work for Hire”, which means the commissioning party is the automatic owner of the photographs from their creation. Assignment Agreement: In this sample agreement, the photographer assigns all right, title and interest in the photographs to the broker. Exclusive License Agreement: A photographer may want to retain its ownership of the photographs. In this sample agreement, the photographer grants the broker an exclusive license to display and distribute the photographs in connection with the real estate industry. Full article by NAR with sample agreements online at http://www.realtor.org/law-and-ethics/who-owns-your-property-photos |
RMAAReal Estate News, Brokers Blog & More Categories
All
Archives
July 2024
|