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.
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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 What happens when a seller of property executes a contract in the wrong capacity?
Individual Property Owners If an individual is buying or selling a piece of property, the individual should execute the sales contract by signing just his name. Parties will sometimes, though, sign a contract in the wrong capacity. For example, if a seller owns a property personally, but he signs a purchase agreement as though the seller is the corporation of which he is president, then the contract is unenforceable. The corporation didn’t own the property, making that signature invalid. The owner didn’t sign the contract personally or individually. There is not a valid signature. If the parties don’t want to correct the mistake, or one (or both) of the parties does not want to move forward, the contract is unenforceable. Authorized Agents or Representatives If a corporation or some other entity owns the property, the person signing the contract on behalf of the company must reflect that representative capacity in the signature block of the contract. Authorized representatives may sign on behalf of corporations, partnerships, limited partnerships, and limited liability companies. Typically, the closing attorney in such a transaction will want a copy of the legal documents for the entity or a corporate resolution confirming the authority of the person to act in a representative capacity. Executors, Administrators, Trustees and Guardians Contracts signed by executors, administrators, trustees and guardians must identify the capacity in which a person is signing. The representative must name the person or entity being represented on the face of the contract and show that they are signing the contract in a representative capacity. If the representative relationship is not clearly disclosed on the contract, the contract could be enforced against the individual acting as the agent, representative, trustee, or guardian and not against the person or entity being represented. Persons Whose Names Have Changed Generally, when a seller’s name on the purchase and sale agreement is different from how it appears on the deed recorded in the land records, a closing attorney will require the seller to bring to the closing for verification her marriage license, divorce decree, or other official name-changing document, and a photo identification reflecting the seller’s new name. Once the name change is verified, a name affidavit stating that the named persons are one and the same is included in the recital section of the property deed. Lastly, closing attorneys generally require that the seller sign the deed and purchase and sale agreement with the new legal name, followed by “formally known as [or f.k.a.] _____________ [previous legal last name].” The sample signature block set forth below may be used to indicate a name change: Seller: /s/ Sally Smith Jones Sally Smith Jones, f.k.a. Sally Smith Using a Power of Attorney An individual who has been given a power of attorney may sign a contract on behalf of any individual party who has the capacity to enter into a contract. Since a contract for the sale of land must be in writing, the power of attorney giving someone the authority to sign a real estate contract on someone else’s behalf also must be in writing. Georgia law also requires that the power of attorney be signed and sealed by a notary public and separately witnessed if the power of attorney is being given to buy or sell land. Generally, a power of attorney to sign a contract is executed before a party signs a real estate agreement on behalf of an absent party. However, in some rare instances, a party who is not authorized to sign an agreement will do so on behalf of an absent party without a power of attorney. If such an instance occurs, the contract will generally be void and unenforceable because the signatory did not have the proper authority to consummate the transaction. However, the party with the proper authority may ratify the contract after it has been signed by creating a power of attorney with a retroactive effect. Normally, in closing real estate transactions, the closing attorney is going to ask for the documents evidencing the power of attorney’s authority to execute the agreement on behalf of the absent party and recommended practice is for a party to grant the representative a formal power of attorney that expressly empowers the representative to execute a sales contract for a particular piece of property. If such a power of attorney is executed, the terms of the power of attorney should describe the property with the same specificity as the contract itself. Although the power of attorney may include only a general description of the property, title insurance companies are reluctant to accept such general authority for a representative to act. Nevertheless, it is best if the power of attorney state that the representative has the express power to sign mortgage loan documents, if this is going to be the case. Lenders and title insurance companies may have their own preferred form for powers of attorney and require that they are used. While any legally enforceable power of attorney should do, it may make the transaction smoother to first check with the lender’s closing attorney or title insurance company to determine if they have a preferred form. Consequences of an Insufficient Power of Attorney A party who signs a contract based on an insufficient or ineffective power of attorney is not bound to the contract. Individuals who deal with representatives in real estate contracts should carefully examine the representative’s authority to act. If there is a written power of attorney, the party giving the power of attorney should be contacted, if possible, to confirm its authenticity. The parties may also attach a copy of the power of attorney to the sales contract. A power of attorney must be effective at the time it is being exercised. If the power of attorney is very old, it is best to verify that it is still valid. The power of attorney must be signed by the property owners of record. Further, the power of attorney must contain a provision that allows the agent to execute a deed of transfer of ownership to the property as well as the power to negotiate the terms of the sale. A power of attorney terminates by express revocation, by the appointment of a new agent, or by the death of the principal or agent. If a person acting in a representative capacity signs a contract based on a power of attorney and the power of attorney does not actually give the representative the authority to enter into the contract, the other party to the contract cannot sue the representative for a breach of authority if that other party could have protected himself by taking ordinary care, such as reviewing the power of attorney or contacting the party who gave the power of attorney. Source: Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (pp. 299-307). BookBaby. Kindle Edition. Injuries to potential buyers and brokers while viewing property are not uncommon. This article explores the liability of owners to invitees to a resale property and to houses under construction.
Open Houses and Showings Homeowners are generally responsible for exercising reasonable care to make a property safe for those invited onto it. This general duty to make a property reasonably safe includes repairing dangerous conditions that are known or could be reasonably discovered by the homeowner or warning guests of their existence. Comparative Negligence However, to recover for an injury suffered on and because of someone else’s property, the injured party must have been exercising “ordinary care” when they were nonetheless hurt. Georgia common law follows a modified comparative theory of negligence, where the law aims to place the burden of an injury on the party best situated to have avoided it. In other words, an injured party can only recover damages for an injury if the party was comparatively less at fault for the injury than the person being sued. The law only requires that the owner or occupier of land ensure that the property is safe enough that a person who does manage to hurt herself is comparatively more to blame for her injury than the owner or occupier of the land. Does a property owner owe a special duty to someone who may come on to listed real estate solely because of having seen a “For Sale” sign. This issue came up recently in two separate instances in which homes were listed for sale and “For Sale” signs were placed in the yards. Two different buyers saw the signs and decided to walk onto the properties on their own to have a look around. Both suffered significant injuries when, for one a deck, and for the other a stairway fall. They both sued, claiming that the owners owed them a duty to warn about the defective conditions; even though the owners had no idea these prospects were on the properties. As if often the case, there are two appellate decisions in Georgia addressing similar issues, both of which reach opposite conclusions. The safest course is for owners to post warnings or rope off areas of the property that might be unsafe, no later than when a “For Sale” sign is placed on their property. How do you get rid of uninvited people on your property? How about guests that have overstayed their welcome? Do you call the sheriff or go to court? It depends on the situation.
What is a Squatter? A squatter is someone who occupies a property or area of land without lawful permission and has the intention of living there as if they were the owner. What is the Relationship Between a Squatter and Adverse Possession? Adverse possession is the set of legal elements that give a squatter the right to gain legal title of a property. The terms adverse possession and squatter’s rights are often used interchangeably. It takes at least 7 years (if the squatter acts under color of title) or 20 years of exclusive, actual, open (visible), hostile (no permission) and continuous use by the squatter to satisfy the legal requirements to gain title by adverse possession. It is difficult at best. What is the Difference Between a Squatter and a Trespasser? A trespasser is someone that knowingly enters someone’s house, building or land without permission or authorization, but without the intention of claiming the property as their own. Trespassing is a criminal offense. Call the Sheriff. On the other hand, a squatter is claiming ownership. To get rid of a squatter, the owner must go through the civil court system (rather than the criminal system). File a lawsuit. The Sheriff can’t help. The GAR form Seller’s Property Disclosure (SPD) provides for disclosure of insurance claims made during the Seller’s Ownership. If insurance claims have been made and they are not disclosed, the Seller may be accused of misrepresentation and fraud.
Why Disclose Insurance Claims? There are several reasons. First, disclosure by the seller avoids a claim by a buyer that the Seller misrepresented the property or did not disclose a material fact. If proved, it can cost the seller a lot. Second, the SPD puts buyers on notice of issues that may affect their decision to buy. For example, if there was an insurance claim for a plumbing leak, the buyer would want to inspect the area to be certain the leak was properly corrected. Third, the buyer’s home insurance premium can be much higher than expected if the seller has made numerous claims. Insurance companies do not want to insure a problem house. Depending on the number of claims, the buyer could have trouble getting insurance. Or if the insurance company decides to insure, it may decide to increase the premium to insure. Fourth, the CLUE Report. When a buyer tries to get insurance on the house, the insurer will pull a CLUE report. CLUE stands for Comprehensive Loss Underwriting Exchange (CLUE). The report details a seven-year period of personal auto and property claims. Insurance companies use CLUE reports in the underwriting process and to determine premiums. The report includes the insured's personal information, policy number, type and date of loss, claim status, amount paid, and insured property information. If the seller has not disclosed insurance claims, this is where the buyer will find out the truth. If the buyer gets the report before closing, it could kill the deal. If after closing, it could be grounds for a lawsuit. (Only owners and insurance agents can request the CLUE report.) Remember the mantra: Disclose, disclose, disclose. Sellers often are apprehensive about revealing problems that could potentially discourage buyers from making an offer. Remember the mantra: Disclose, disclose, disclose. An inspector will likely find the issues anyway. The seller has then lost the buyer’s trust and lost the high ground in negotiating the repair. Or worse. |
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