The 2021 GAR contract changes are now active. In past weeks we covered 2021 changes to the Listing Agreement (Engagement) Agreement, the Buyer Brokerage (Engagement) Agreement and the Purchase and Sale Agreement. This week we summarize important changes to Disclosures, Exhibits and Authorization.
For additional detail, please see the RMAA Hub Resources Library for a Power Point of Missy Robinson’s class on the changes, as well as the Campbell and Brannon class presented by Christian Ross and Peter Babcock. The new forms can also be found in the RMAA Hub in the Resources Library. There will be additional classes on the changes to the forms. We highly recommend that you register for one and attend!
As noted in last week’s Broker Corner2021-gar-contract-changes-part-1.html, the 2021 GAR contract changes are final. Last week the changes to the Listing Agreement were summarized. This week we will cover the changes to the Buyer Brokerage Agreement and the Purchase and sale Agreement. For additional detail, please see the RMAA Hub Resources Library for a Power Point of Missy Robinson’ s class on the changes. The new forms can also be found in the Resources Library. There will be additional classes on the changes to the forms. We highly recommend that you register and attend!
Important changes to the Buyer Brokerage Agreement:
Important Changes to the Purchase and Sale Agreement:
Note that there are other miscellaneous changes in the Purchase and Sale Agreement, including renumbering and content location changes. Please review the new Purchase and Sale Agreement before using it.
There are miscellaneous changes and updates to the New Construction PSA and the New Construction Exhibit.
There are several new forms that are welcome additions to the GAR Forms. Please review them.
Next week we will summarize changes to Disclosures, Exhibits and Authorization.
The January 2021 GAR contract changes are final. A Power Point of the changes, written by Missy Robinson of Chicago Title, is posted in the RMAA Hub in the Resources Library. There are new forms as well which can also be found in the Resources Library. Important changes to the agreements will be covered here over the remaining weeks of December. Please be sure to review the changes and new forms before using them for details.
Important changes to the (former) Listing Agreement:
Next week we will summarize changes to the Buyer Brokerage Agreement and the Purchase and Sale Agreement.
Low inventory and high demand have driven highly competitive multiple offer situations. To distinguish themselves, buyers often send sentimental letters and photographs to sellers to promote and distinguish their offer as the one to accept. It is important to keep Fair Housing laws in mind, however, whenever your client either sends or receives a letter.
Do not allow a photo to be included.
Including a photo of a buyer with a letter to a seller almost inherently violates fair housing laws. A photo can pull the Seller’s heartstrings, but it can also show race, color, family status or other features of being in a protected class. This does not just impact the sellers who viewed the photo or the buyers who submitted it, but the real estate licensees who are involved in the transaction. All are culpable under state and federal laws. If you receive a letter to a seller with a photo, inform the sender that the photo cannot be included. If the buyer won’t remove it, you should.
A letter itself may not violate fair housing laws – unless it does.
NAR’s Board of Directors today strengthened REALTORS®’ commitment to upholding fair housing ideals, approving a series of recommendations from NAR’s Professional Standards Committee that extend the application of Article 10 of the Code of Ethics to discriminatory speech and conduct outside of members’ real estate practices.
Article 10 prohibits REALTORS® from discriminating on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity in the provision of professional services and in employment practices. The Board approved a new Standard of Practice under the Article, 10-5, that states, “REALTORS® must not use harassing speech, hate speech, epithets, or slurs” against members of those protected classes.
The Standard of Practice directly flows from the requirement to not deny equal professional services or be parties to a plan to discriminate. Specifically, bias against protected classes revealed through the public posting of hate speech could result in REALTORS® not taking clients from certain protected classes or not treating them equally, which would lead to violations of the Fair Housing Act due to overt discrimination or disparate impact.
The Board also approved a change to professional standards policy, expanding the Code of Ethics’ applicability to all of a REALTOR®’s activities, and added guidance to the Code of Ethics and Arbitration Manual to help professional standards hearing panels apply the new standard.
For this week’s Broker Corner, we are showcasing some common legal questions that come up again and again. Thanks to GAR Legal FAQs for this inspiration!
Does a real estate purchase agreement automatically terminate if the buyer does not show up for the closing?
No, unless the contract specifically provides otherwise. When a party fails to perform under a contract, the contract is terminable due to the breach by that party but is not automatically terminated. For the contract to be terminated, a formal notice of termination must be sent to the breaching party.
Can one spouse sign a contract for another spouse?
No. In Georgia, a person cannot sign a contract for another person unless they are legally authorized to do so. Being married does not give one spouse the legal authority to sign for the other. If a person wants to grant the person’s spouse the right to sign a contract on his or her behalf, he or she would need to sign a power of attorney granting that right.
Is there any consumer protection law for a property purchase agreement where a buyer has a few days after signing a contract to terminate it?
With one exception, the answer to this question is no. However, the initial sale of a
condominium unit in Georgia is subject to a 7 day right of rescission on the part of the buyer commencing from the date that a binding contract is created and an acknowledgement is signed that they buyer has received the condominium disclosure package. (See O.C.G.A. § 44-3-111.)
A question we get asked a LOT is “how long will rates stay low?”. Obviously, if I knew the exact answer to that question, I wouldn’t be writing this article for all of you fine folks! I would be on my private island in the Bahamas or Tahiti sipping on a frozen concoction from a coconut with a little paper umbrella! J But there are some predictions and I thought it would be helpful for you to have this knowledge for your clients. First off, the election (if we ever finish this) should not have any immediate impact on rates. The COVID stimulus package that everyone thought was coming before congress left, didn’t happen and since they won’t all be back until mid-November, rates should stay pretty stable until at least then. If a big stimulus package is passed that could put upward pressure on interest rates, but it would only move them a little bit. The big thing that will start to cause rates to move upward will be a viable COVID-19 vaccine. When that happens, and people in the hardest hit industries can start returning to work and things start to return to normal, I would expect rates to start a more noticeable rise.
Rates are being kept artificially low right now because the Federal Reserve is buying up Mortgage Backed Securities (MBS) to create artificial demand and drive rates lower. This was a strategy to help the economy weather the COVID storm.
But as soon as a vaccine looks to be in place for most Americans, and we start to see growth again, the Fed is likely to stop this policy and let the free market take over again, which will cause rates to rise. No one knows exactly when that will be, but as you are advising your clients, let them know that any signs of vaccines working and begin distributed will most likely be followed by rising interest rates. The best predictions we have right now is that rates will stay in the upper 2%’s range (30 year fixed) for the remainder of 2020 and will slowly begin to climb in the late first quarter or early second quarter of 2021. The predictions show them ending 2021 in the upper 3’s. Obviously, no one KNOWS what will happen, but this seems to be the current consensus.
Thanks and Happy Thanksgiving to each of you and your families!
A Georgia Real Estate Agent’s Guide to Georgia Probate and Distribution of Real Estate
Is Probate in Georgia Really Necessary?
No! Probate court proceedings aren’t always necessary. Usually, they are required only if the deceased person owned assets in his or her name alone. Assets that are jointly owned, assets that name a beneficiary (insurance policies, retirement accounts or payable on death bank accounts) and assets in revocable living trusts can usually be transferred to their new owners without probate.
Georgia is unique in that probate court proceedings aren’t always necessary. If all the heirs agree, probate can be skipped altogether. Commonly, probate is conducted in about six months to a year, unless, of course there is a court fight over the will or unusual assets or creditors’ claims that complicate matters.
In certain circumstances, any heir (person entitled to inherit under state law, in the absence of a will) can ask the local probate court for an order stating that no probate is necessary. The court will grant the request if the deceased person did not leave a will, all the heirs agree on how to divvy up the person’s assets, and there are no debts or creditors don’t object to the lack of a probate proceeding. It will still be important to change the legal ownership to the person that inherits to there is not a title problem. If there is a court order, an attorney can handle the name change.
The Role of the Executor or Personal Representative (PR) When Probate is Required
Follow the Rules!
Internal Revenue Code 1031 Tax Free Exchanges -
When property held for investment or business purposes is sold for more than its original purchase price, any gain from the sale is subject to capital gains tax. However, an IRC Section 1031 exchange—also called a tax-deferred exchange— allows a sale of the investment or business property and a purchase of a like-kind replacement property without paying the capital gains tax. The sale proceeds can be reinvested without paying additional taxes. Used correctly, the 1031 Exchange is a powerful money-saving tool. But there are rules. Lots of rules. Breaking the rules means the client’s profit on a sale will result in tax liability in the year of the sale.
Most importantly, we as real estate agents are not (generally) tax professionals and cannot give advice regarding the complexities of the Internal Revenue Code. It is complicated. It changes. And it is a violation of the code of ethics to offer advice on subjects in which we are not qualified. We should, however, have a general understanding of the process and know what language to use in Purchase Agreements to facilitate the process– both when the client sells the relinquished property and when the client buys a replacement property. If your client does not have a sophisticated understanding of the portions of the United States Code governing 1031 tax-deferred exchanges, consider advising your client to hire a qualified tax exchange professional.
Steps to be followed by an investor for a successful 1031 tax deferment:
New construction sales are way up and RMAA new construction contracts are way up too. Unless a new home purchase is substantially complete, there are issues unique to new construction contracts that should be explained to buyers. It’s always better to be pre-dispose a buyer to new construction issues than to deal with unexpected, unpleasant surprises. Before you show a new construction property, do some research on the builder and check out their reviews.
First, RMAA housekeeping matters. Many new home contracts do not include items required by GREC. When you are presented with the purchase paperwork, please be certain that it includes not just your Georgia Real Estate License number, but also the RMAA Firm License number H-53737 and, if it was in FMLS, the Office Code number. In the Agency section, the contract should also state that you are representing the Buyer as a client. If any of the items are omitted, please have them added to the signature block or the special stipulations. If they are not included, the contract will have to be amended to be GREC compliant. Hate that extra step.
Generally, large merchant builders have their attorneys write a Purchase Agreement that is unique to them. They are often one-sided, protecting the builder over the buyer. Changes are either discouraged or prohibited. Your job, as the buyer's agent, is to understand it thoroughly, so you can explain it to your buyer. Some builders do use the GAR New Construction Purchase Agreement. It will include the items in the above paragraph.
These are some things to look for: