Mid-Year Contract Changes

Beginning August 1, new changes to the GAR Purchase and Sale Agreement will go into effect.

Changes are as follows: 

On the Purchase and Sale Agreement (F20), changes were made to modify language on section B7 regarding the disbursement of earnest money reflecting changes stating that the disbursement of an earnest money check constitutes liquidated damages in the even that the transaction fails to close due to default by the Buyer. This means the Seller waives any right to assert a claim for a specific performance.

Language referencing the Seller's rejection of the disbursement of the earnest money check has also been removed, and the Rights of Buyer or Seller have been broken into two sections titled "Remedies of Seller" and "Remedies of Buyer".

These same changes were made to the Purchase and Sale Agreement forms for purchases on New Construction (F23), Lots (F27), Land (F34), and Leased Properties (F36).

In the event that a transaction falls through wherein the Seller is the defaulting party, a Buyer is now able to seek the specific performance of the contract or terminate the contract after notifying the seller and holder of the earnest money. If this is the case, all earnest money deposits and other payments made by the Buyer will be returned to the Buyer.

What it all means 

In the past, both the Buyer and Seller could pursue all lawful remedies including consequential damages, closing fees, and moving expenses. Now, the seller's sole remedy for a Buyer's breach in contract is to accept the earnest money, meaning that sellers will likely start asking for more earnest money as a result.
For the Buyer, their options for Seller's default are now to either sue for specific performance, or terminate the contract with the return of the earnest money.

For more information on the changes, you can read Georgia Association of Realtors General Counsel Seth Weissman's article here.