The GAR Purchase Agreement includes a detailed representation and agency section that identifies the Brokers and the type of Buyer or Seller representation that exists between Brokers and the parties. One of the reasons for requiring clarity of representation is that notice to a party can be accepted, or cannot be accepted, by the named Broker according to the type of representation that exists.
The Binding Date of a Purchase Agreement confirms acceptance and initiates certain time periods in the PSA. Binding Date issues can derail a contract if the parties are not operating from the same date. This can happen when an incorrect binding date is entered or if no date has been entered
In many builder transactions, an attorney, who is representing the builder, has drafted the builder’s contract from scratch. They most often favor their clients, the builders, rather than your clients. Here are a few things to look for and bring to the attention of your clients.
The 3 most common deeds that we see in real estate are Quitclaim Deeds, Limited Warranty Deeds and General Warranty Deeds.
A quitclaim deed transfers the ownership interest of the grantor to the grantee without any warranties or guarantees that title is good or that the property is free of liens or claims. It transfers whatever is owned by the grantor. If the Grantor owns nothing, then nothing is conveyed. If the Grantor co-owns along with others, the Grantee gets what the Grantor owned – ownership along with others. The quitclaim deed is used mostly in non-sale transactions such as transfers between spouses or parents to children. It is used also in commercial transactions to clear title issues.
Limited Warranty Deed
When a special or limited warranty deed is used, the grantor only warrants that there are no title defects during the time the grantor owned the property. The limited warranty deed gives the grantee more protection against claims to title than a quitclaim deed, but less protection than a general warranty deed. If a tax lien or another lien pops up that was prior to the ownership of the grantor, the grantee may have to pay it. Note the title insurance comment below.
General Warranty Deed
A general warranty deed offers the best protection for the grantee because it guarantees, from the beginning of time, that the title is good and marketable. The grantor promises the grantee that the grantor will defend the grantee from any all claims made by third parties. That tax lien owed from before the time the grantor owned the property would have to be covered by the grantor.
There are 2 approaches to handling Multiple Offers.
The first approach is for the Seller to instruct the Listing Agent to ask for the “Best and Final” or “Highest and Best” offers from all potential buyers. This process carries some risk. It may cause some buyers to back away. Buyers don’t like to bid against themselves and don’t like bidding wars. It’s a risk the Seller takes.
The second approach is for the Seller to pick the offer that looks the best and negotiate that one. If it does not work out, the Seller can move on to the next offer – if it has not been withdrawn. There is no rule that the Seller must negotiate the offers in order or that the seller must choose any particular offer - so long as the process is fair and does not violate Fair Housing rules.
The key is that the client decides how they wish to proceed – not the agent.
Earnest Money is almost always involved in an offer to purchase. The terms of the contract determine when the earnest money is due. But what if the funds are not delivered on that required date? What are the consequences and how should it be handled?
If the funds are not delivered on time, is the Buyer in default?
Yes, the Buyer is in default. But that doesn’t mean the contract has failed. The Seller’s right to terminate when earnest money is late is limited. First, the Holder named in the contract must promptly give Notice to both the Buyer and the Seller that the funds have not been delivered. The Buyer then has three (3) banking days from the date of receiving the notice to cure the default. If the Buyer does not do so, the Seller may, within seven (7) days thereafter, terminate this Agreement upon notice to Buyer. If the Seller fails to terminate the Agreement timely, Seller’s right to terminate based on the default is waived and the contract is enforceable.
Describing a space in a way that appeals to all buyers is the law (and it’s just good business).
There are certain phrases that should never appear in a property description. Some phrases are very clear violations of Fair Housing, others may be in a grey area. When deciding if something might violate fair housing, assume that it does. Our unconscious biases are just that. Unconscious. Being sensitive to how others might react will avoid discriminatory language that violates fair housing. Here are some examples of language to avoid.
The GAR 2022 Purchase and Sale Agreement (PSA) includes changes that clarify the Binding Agreement Date and have added a process to object to the date entered.
Sending Notice of Acceptance
The PSA defines the Binding Agreement Date as the date when a party to the transaction, who has accepted an offer or counteroffer, delivers notice of that acceptance to the party who made the offer or counteroffer. Notice may be delivered by either party or the Brokers working with or representing the parties to the other party. Sending a fully signed purchase and sale agreement with a specific Binding Agreement Date included, that one of the parties has agreed to, constitutes notice of the Binding Agreement Date to the other party.
When and how to use Dual Brokerage can be confusing. Let’s break it down.
It sometimes happens that a property is rezoned for a use other than that for which it is presently being used.
For example, a property previously zoned for single-family residential use with 100-foot frontage may be rezoned to require a 200-foot frontage. Another example: a property may have 2 rental units, but a rezoning allows only 1 rental unit.
If a property is being used for something other than what the property is presently zoned for, it is referred to as a “nonconforming use.” A legal nonconforming use is one that lawfully existed prior to the enactment or amendment of a zoning ordinance. An illegal nonconforming use is a property use by an owner that was never lawful to begin with and does not conform to the current zoning ordinance. Illegal nonconforming uses, if discovered, are subject to an enforcement action by local government for their removal.
Most legal nonconforming uses can be “grandfathered.” In other words, the nonconforming use will generally be permitted to continue so long as the owner can show that the land was lawfully used prior to the ordinance’s adoption and the use continues. However, if a nonconforming use is discontinued for whatever time period specified in the local zoning ordinance, the use will be abandoned and cannot be reestablished.
For example, current zoning does not allow for a rental unit in a primary owner-occupied property. A retiree had a legal residential non-conforming use that allowed a rental apartment. The retiree moved to an assisted living residence, the tenant moved out and the property was vacant. If the owner decides to sell the property as a residence with a rental unit after the period of time specified in the ordinance, they can’t. The nonconforming use was discontinued for the period of time specified in the zoning ordinance, so the non-conforming use is abandoned and cannot be reestablished.
Examples of other non-conforming uses are new zoning features such side, rear, or front setbacks in areas that include older properties. A new city zoning ordinance requires a 10-foot side setback for all improvements. An old tool shed sat right on the line. If the tool shed burns down and the owner wants to build a new toolshed, the new tool shed has to conform to the new zoning and be set back 10 feet from the sideline. (Of course, the owner could apply for a variance to the new zoning. Without extraordinary circumstances, however, a variance would not likely be granted.)
Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (pp. 209-213).
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