Contract & Due Diligence – Part I
Purchase and Sale Agreement.
A purchase and sale agreement should not be seen as an intimidating document full of legalese. Instead, the agreement should be seen as a framework for setting the expectations of a buyer and seller in the purchase process. Ideally, a contract should be prepared by a Georgia real estate attorney or a Georgia real estate broker or licensee. Georgia licensees use the Georgia Association of Realtors contract forms ("GAR" forms).
Working with an Agent or FSBO?
We work with both unrepresented parties as well as those who are working with real estate agents. If you are not working with a real estate agent, (transactions that are "For Sale By Owner" for example), we can assist in the preparation of your purchase and sale agreement.
Important Contract Terms.
Execution of a sales contract is the first formal stage in purchasing a property after one has been selected.
The contract should contain, at a minimum, the following basic terms—
- adequate description of property
- sales price and earnest money
- closing date (time for performance)
- buyer's "free look" or due diligence period
- call for specific quality of title at closing (such as General Warranty Deed)
- allocation of closing expenses
- designation of closing attorney
Once a property has been selected, a sales contract will be signed by the buyer and seller memorializing the terms of the agreement.
Legal Requirement.
The purchase and sale agreement is a necessary beginning point since the statute of frauds requires sales contracts involving land to be in writing.
Typical Closing Period.
While the terms can vary greatly, in Georgia, a typical homebuyer will close in 30 to 45 days from contract.
Need help with a Purchase and Sale Agreement? We are here to help.
Beware of Using Contract Forms...
Pre-printed "office supply store" contract forms may be perfectly valid from a legal standpoint. However, did you know that these "canned" forms rarely represent the true intentions of the parties. As the transaction progresses, discrepancies become apparent resulting in disagreements that often jeopardize the closing.
Best Advice—
Get a Georgia real estate attorney involved at the beginning of the contract phase. There are simply too many nuances involved in the preparation of a real estate purchase and sale agreement to leave to a pre-printed form.
Pre-printed "office supply store" contract forms may be perfectly valid from a legal standpoint. However, did you know that these "canned" forms rarely represent the true intentions of the parties. As the transaction progresses, discrepancies become apparent resulting in disagreements that often jeopardize the closing.
Best Advice—
Get a Georgia real estate attorney involved at the beginning of the contract phase. There are simply too many nuances involved in the preparation of a real estate purchase and sale agreement to leave to a pre-printed form.
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Questions? Speak with a Real Estate Lawyer
CHRIS PAHL
Attorney at Law
945 E Paces Ferry Road
Resurgens Plaza
Atlanta, GA 30326
Telephone +1(678)448-4148
Attorney at Law
945 E Paces Ferry Road
Resurgens Plaza
Atlanta, GA 30326
Telephone +1(678)448-4148
Contract & Due Diligence – Part II
Importance of the Due Diligence "Free Look" Period
In Georgia, it has become customary over the years to include an all encompassing due diligence period commonly lasting 10 to 14 days. Buyers are advised to use the period to inspect every single element of the purchase transaction, since objections which are raised later could result in forfeiture of earnest money.
- Financing*
- Appraisal
- Property Inspection
- Specific Use*
- Radon
- Registered Sex Offender
- School District
- Survey*
- Title*
- Association Fees*
- Lead Based Paint
- Wood Infestation
- Flood Zone
- Covenants
*Financing Contingencies.
Buyers are advised that modern finance contingencies may permit an exit under strict, limited circumstances only. For this reason, financing should be finalized during the due diligence period and not the finance contingency period. The due diligence period should be extended if financing issues arise. If a buyer requires a financing contingency, we recommend a custom tailored contract stipulation. The GAR Financing Contingency Form should be avoided.
*Survey.
A survey is always recommended. Ideally the survey should be ordered so that it may be reviewed prior to the expiration of the due diligence period, and at the latest, prior to closing. A survey is indispensable under the following circumstances:
Buyers are advised that modern finance contingencies may permit an exit under strict, limited circumstances only. For this reason, financing should be finalized during the due diligence period and not the finance contingency period. The due diligence period should be extended if financing issues arise. If a buyer requires a financing contingency, we recommend a custom tailored contract stipulation. The GAR Financing Contingency Form should be avoided.
*Survey.
A survey is always recommended. Ideally the survey should be ordered so that it may be reviewed prior to the expiration of the due diligence period, and at the latest, prior to closing. A survey is indispensable under the following circumstances:
- Seller is Builder/Developer
- New Construction
- Property Includes Swimming Pool
- Property Includes Carriage House
- Property Includes Detached Garage
- Property does not Qualify for Enhanced Title Policy
- "Old" Intown Subdivisions
- Property Includes any Expensive Improvement aside from Main Dwelling Structure
- Property is Next to Waterway
- Boundary Lines are anything but Conclusively Certain
- Cluster Homes
- Any Time the Property Lines are in Question
*Title / Specific Use.
Any time property is being acquired for a specific purpose, it is important to obtain and review the title work during the due diligence period. Since personal objections to title do not constitute valid legal objections to title, they must be raised during due diligence rather than relying on any marketability clause contained in the purchase and sale agreement. Note that the GAR Purchase and Sale Agreement calls for only a Limited Warranty Deed and marketable or insurable title. Since a buyer may not permissibly exit the agreement when a defect title is insurable, it is yet another important reason to review title work during due diligence.
*Condo / Community Assessments.
Buyers should never rely solely on the representations of a seller regarding community assessments. It is crucial for the buyer to independently obtain all relevant assessment information directly from the association, with respect to current and proposed assessments. The GAR Purchase and Sale Agreement does not adequately protect purchasers of condominiums. Attorney prepared contracts are always recommended.
Any time property is being acquired for a specific purpose, it is important to obtain and review the title work during the due diligence period. Since personal objections to title do not constitute valid legal objections to title, they must be raised during due diligence rather than relying on any marketability clause contained in the purchase and sale agreement. Note that the GAR Purchase and Sale Agreement calls for only a Limited Warranty Deed and marketable or insurable title. Since a buyer may not permissibly exit the agreement when a defect title is insurable, it is yet another important reason to review title work during due diligence.
*Condo / Community Assessments.
Buyers should never rely solely on the representations of a seller regarding community assessments. It is crucial for the buyer to independently obtain all relevant assessment information directly from the association, with respect to current and proposed assessments. The GAR Purchase and Sale Agreement does not adequately protect purchasers of condominiums. Attorney prepared contracts are always recommended.
Need help with a Purchase and Sale Agreement? We are here to help.
About Those Contract Forms...
Pre-printed "office supply store" contract forms may be perfectly valid from a legal standpoint. However, the biggest problem with these forms is that they rarely represent the true intentions. As the transaction progresses, discrepancies become apparent resulting in disagreements that often jeopardize the closing.
Best Advice— Get a Georgia real estate attorney involved at the beginning of the contract phase. There are simply too many nuances involved in the preparation of a real estate purchase and sale agreement to leave to a pre-printed form.
Pre-printed "office supply store" contract forms may be perfectly valid from a legal standpoint. However, the biggest problem with these forms is that they rarely represent the true intentions. As the transaction progresses, discrepancies become apparent resulting in disagreements that often jeopardize the closing.
Best Advice— Get a Georgia real estate attorney involved at the beginning of the contract phase. There are simply too many nuances involved in the preparation of a real estate purchase and sale agreement to leave to a pre-printed form.
Questions? Speak with a Real Estate Lawyer
CHRIS PAHL
Attorney at Law
Georgia Title & Escrow Co LLC
945 E Paces Ferry Rd, Suite 2250
Atlanta, GA 30326
678.448.4148 Tel
Attorney at Law
Georgia Title & Escrow Co LLC
945 E Paces Ferry Rd, Suite 2250
Atlanta, GA 30326
678.448.4148 Tel
+1(678)448-4148
© 2014-2024 Georgia Title & Escrow Company LLC.
All rights reserved.
© 2014-2024 Georgia Title & Escrow Company LLC.
All rights reserved.
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Buckhead • Atlanta Georgia 30326
Tel +1(678)448-4148
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Real Estate | Closing Lawyer | Land-Title Insurance
Buckhead • Atlanta Georgia 30326
Tel +1(678)448-4148
Open By Appointment Only
Monday through Friday 9am to 5:30pm
Saturday 9am to Noon
Real Estate | Closing Lawyer | Land-Title Insurance
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