The GAR Purchase and Sale Agreement gives the buyer and the buyer’s agents the right to enter and to thoroughly inspect, examine, test, and survey the property under contract. This right exists regardless of whether the property is being sold “as is,” subject to a due diligence period, or with a right to request repair of defects. The right to inspect has to be exercised at reasonable times and exists up to the time of closing. The buyer not only has a right to inspect the property, but under the doctrine of caveat emptor (buyer beware), also has a duty to do so. The underlying principle of law is that the buyer cannot claim that he has been deceived by false misrepresentations about defects that the buyer could have discovered.
Multiple Inspections If the discovery of a condition would cause a reasonably prudent buyer to investigate further, the buyer is under an obligation to investigate further. There are a lot of situations that might require a further investigation: mold, termites, ceiling stains, even a blocked passage. Consider the situation of a burst pipe after the initial inspection. The seller repairs the pipe and repairs the sheetrock. The seller must inform the buyer of the change in condition (the burst pipe and repair) and the Seller Property Disclosure would need to be updated to reflect the condition and repair. The buyer has the right to reinspect to evaluate the repair but is also responsible for the cost of repair following the reinspection. So long as the seller repairs the burst pipe and delivers the property in the same or better condition as it was on the offer date, the seller has fulfilled its obligation. Does the Buyer Have to Hire A Professional Inspector? There is no legal duty for a buyer to hire a professional home inspector or to hire an inspector at all. However, the failure to retain a professional home inspector can be used as a defense against a purchaser who subsequently discovers damage to the property. The argument is that the buyer failed to exercise due diligence by not retaining a professional. Remember, Georgia is a Buyer Beware state. Language Change for Buyer’s Payment of the Cost of Inspection Damage If the property suffers damage by the inspection, the buyer is also required to pay for the repair of any damage to the property caused by the inspection. This section previously provided that: “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.” This section was revised so that the buyer, rather than actually restoring the property damaged in an inspection, agrees to pay to seller the actual cost to restore the damage. This change was made so that the seller could control the repairs being made to the seller’s property. In addition, the entire section was added in a boldface font so that the buyer’s indemnification obligations are now very prominent. By doing this, it will also make it harder for buyers to argue that they did not see this section and should therefore not be bound by it. This indemnification obligation shall not apply to damage resulting from defects in the Property uncovered during the inspection of the Property. Reference: Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (p. 821-836). BookBaby. Kindle Edition.
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NAR’S 2023 PROFILE OF HOME BUYERS & SELLERS – Be the expert and leverage the data provided!5/13/2024 NAR releases some great data every year in their Profile of Home Buyers & Sellers. Here’s how to leverage that data… Sure, homeowners can try selling their homes on their own, but let’s face it: unless they’ve secretly mastered the real estate market overnight, they're likely leaving a hefty chunk of change on the table. Homes agents handle fetch around $405,000 on average, while those FSBO adventures? They average about $310,000. That's nearly $100k that could have been in their pockets. That’s not just a small difference—it’s a new luxury car or a year’s college tuition kind of difference! We live in a country that spends over $52 billion per year on lawn care. Consumers want the easy button, a seasoned pro who can navigate these tricky tides and ensure the sale doesn't just go through but that it sticks the landing financially and legally. So, when you roll out your pitch, don’t just talk about putting up signs and hosting open houses (maybe). Tell them about the real stuff—maximizing their sale price through expert marketing, deep market knowledge, and airtight compliance with the latest laws. You’re not just selling a service; it’s financial security, legal assurance, and, yes, a heck of a lot less stress. Isn’t that worth more than just a handshake and a smile? Here is a link to the NAR Profile: https://cdn.nar.realtor/sites/default/files/documents/2023-profile-of-home-buyers-and-sellers-highlights-11-13-2023.pdf?_gl=1*5i4rar*_gcl_au*MTgyNTk5MDI3Ny4xNzE1MjcxODYx The following two forms must be executed and included with the
contract: 1. GAR Form F510 – Closing Attorney Acting as Holder of Earnest Money Exhibit. This document specifies who the closing attorney is with their contact information. It also includes a section to name an alternate holder who must be a broker. It is very important to name an alternate holder in case the closing attorney does not timely agree to be the holder. Otherwise, there would not be a contractual holder of the earnest money to enforce the terms of the agreement should the earnest money not be delivered or if there is an earnest money dispute. 2. GAR Form F511 – Agreement of Closing Attorney to Serve as Holder of Earnest Money (“Escrow Agreement”). The Buyer’s agent must deliver the fully executed purchase and sale agreement and Escrow Agreement (F511) to the attorney within two days of the binding agreement date. The closing attorney must agree to become the holder within five business days of receiving the entire contract. Important to remember:
If the closing attorney does not agree to become the holder of the earnest money within five business days, the alternate holder automatically becomes the holder.
when it has been done.
to the contract as an exhibit and initialed by both parties. The F511 also needs to be completed and agreed to by the closing attorney and provided to all parties.
funds, the closing attorney shall not disburse the funds based upon a reasonable interpretation of the agreement. The only remedy available to the closing attorney shall be to interplead the funds into a court of competent jurisdiction. We recommend that you have RMAA hold earnest money whenever possible, so we have greater control over compliance and notices. Listing content fuels the real estate industry and displaying photographs of real properties online is now a vital part of the real estate professional’s marketing plan. Sellers use photographs to market properties, and buyers rely on those images to select which properties to visit. MLSs distribute property listings through proprietary databases that include the listing photographs. Moreover, MLSs in turn often license their property listing databases, including broker-provided photographs, to third-party portals, such as realtor.com®, and other websites and vendors.
Improper use of listing photographs, however, can create legal problems for agents, brokerages and MLSs. Authorship and ownership of photographs within the real estate industry is “fractured”. Who authored the photograph and who can use what photograph and in what way varies across the industry. Listing photographs may be taken by homeowners, real estate agents, MLS or brokerage employees, or professional photographers. Photographs may be owned or licensed to different parties in a variety of ways. A misunderstanding of how you may use the photographs for property listings could make you vulnerable to a copyright lawsuit. It is crucial to know what rights you own in photographs and how those rights permit you to use the photographs. To reduce your risk of copyright infringement, you should:
Work for Hire Agreement: This sample agreement provides that the commissioned photographs are a “Work for Hire”, which means the commissioning party is the automatic owner of the photographs from their creation. Assignment Agreement: In this sample agreement, the photographer assigns all right, title and interest in the photographs to the broker. Exclusive License Agreement: A photographer may want to retain its ownership of the photographs. In this sample agreement, the photographer grants the broker an exclusive license to display and distribute the photographs in connection with the real estate industry. Full article by NAR with sample agreements online at http://www.realtor.org/law-and-ethics/who-owns-your-property-photos Situation:
Broker A has a valid Buyer Brokerage Agreement with an individual Buyer. Broker A and the Buyer view a property together with Broker B, representing the Seller. The Buyer submits an offer on the property, but withdraws it before the offer is accepted. Later, while the Buyer Brokerage Agreement is still in effect, Buyer crates an LLC with a partner and submits a 2nd offer to purchase the same property. The Buyer’s Broker is not included in the new transaction. The transaction closes with the new LLC, of which the Buyer is a Member. The Buyer is at the closing and signs the security deed. Questions:
Buyer as a Legal Entity and Commission Owed to Buyer’s Broker The Buyer Brokerage Agreement at paragraph 7(f) includes the Buyer as follows: "Any legal entity in which buyer or any member of Buyer's immediate family owns or controls, directly or indirectly, more than ten percent (10%) of the shares or interest." Where the buyer changes its legal entity to another either to avoid its obligation or innocently, the Buyer is still obligated on a Buyer Brokerage Agreement that is still in effect. No, the Buyer cannot avoid its obligation to the Buyer’s Broker by changing its legal entity so long as the Buyer owns more than 10%. And yes, the Buyer continues to owe a commission to the Buyer’s Agent. It may take legal action to recover the commission, but it is owed. The Listing Agent’s Obligations REALTORS® have an affirmative obligation to ask prospects whether they are a party to any exclusive representation agreement and may not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements. In this case, the Seller’s agent was fully aware of the original buyer, having shown the property to the buyer previously, along with the Buyer’s agent. Even if the Seller’s agent thought the Buyer Brokerage has expired or was terminated, the listing agent should have investigated. Had he called the Buyer’s agent he would have learned that the Buyer Brokerage was still in effect. He violated both Georgia License Law and the REALTORS® Code of Ethics. (GA Code § 43-40-25 (14) and § 43-40-25 (26), REALTORS® Code of Ethics Standard of Practice 16-9) COMMISSION SECTION OF SELLER BROKERAGE ENGAGEMENT AGREEMENT To complete the commission section of the seller brokerage engagement agreement, it is required that one of the boxes is marked in paragraph 4.b. (highlighted below). This section should indicate if the Seller Directs Seller’s Broker to Pay or Not to Pay a Cooperating Broker a Portion of the Seller’s Commission. We are seeing this section left blank, but it needs to indicate one or the other. 4. Commission. [Select one or more of the following below.] a. Commission to be Paid to Seller’s Broker. Seller agrees to pay Broker the following commission (“Commission”) at the closing of any Contract to Sell (as that term is hereinafter defined) of the Property as follows: * __________________________ percent (%) of the sales price; * $__________________________________________________; * (other) _____________________________________________. b. Seller Directs Seller’s Broker to * Pay or * Not to Pay a Cooperating Broker a Portion of Seller’s Commission Above. (NOTHING HEREIN SHALL OBLIGATE SELLER TO DIRECT BROKER TO PAY ANY PORTION OF ITS COMMISSION TO A COOPERATING BROKER. IN SUCH EVENT, THE BUYER SHALL BE RESPONSIBLE FOR PAYING THE COOPERATING BROKER’S COMMISSION). If Seller’s Broker is paying a cooperating broker a portion of its commission, it shall be in the amount set forth below, subject to the following exceptions: * __________________________ percent (%) of the sales price; * $__________________________________________________; * (other) _____________________________________________. Exceptions _____________________________________________________________________________________________ Section 4.d in the GAR buyer brokerage engagement agreement lays it out. The Protected Period is the period of time commencing upon the expiration or earlier termination of this Agreement by Buyer in writing during which Broker shall be protected for its Commission. The Protected Period is the number of days remaining on what would have been the original agreement as of the date the Buyer terminates the Agreement plus the number of days set forth as the Protected Period in Section 4.d of the buyer brokerage engagement agreement.
The GAR Exclusive Buyer Brokerage Engagement Agreement provides that the broker is entitled to a commission, if the buyer purchases or contracts to purchase, for a period of time after the termination or expiration of the brokerage agreement, a property identified or shown to the buyer by the broker or about which the broker provided information to the buyer during the brokerage agreement. While the terms “identified” and “shown” are not defined, the terms were intended to protect brokers in situations where the buyer learned of the property through the broker’s efforts. The language allowing a broker to collect a commission if the buyer purchased property based on information the broker provided to the buyer accomplishes the same goal. As such, it is not required that the broker actually show the property to the buyer, provided that the broker has taken other reasonable steps to make the buyer aware of the property. Verbiage from the GAR Buyer Brokerage Engagement Agreement: 4.d The Protected Period shall be the period of time set forth in this Agreement commencing upon the expiration of this Agreement or what would have been the expiration of this Agreement had it not been unilaterally terminated by Buyer during which Broker shall be protected for its Commission and/or Leasing Commission, as applicable. There shall be no Protected Period if Buyer and Broker mutually terminate this Agreement. In the event Buyer enters into a Contract to Purchase or lease, lease to purchase or lease with an option to purchase of real property which, during the term of this Agreement or what would have been the term of this Agreement had it not been unilaterally terminated by Buyer, was shown to Buyer by Broker, either virtually or in person, or which Buyer otherwise visited ("Protected Properties"), then Buyer shall pay Broker at closing or prior to the commencement of the lease the Commission and/or Leasing Commission, as applicable, set forth above. It’s not uncommon for a couple going through a divorce to need to sell their home. As a real estate professional, you may find yourself involved in transactions where the sellers are navigating divorce. In those cases, do you need to disclose that the sellers are getting divorced?
You are not required to disclose your client’s personal reasons for selling or personal information that doesn’t affect the material value of the home. In addition, disclosing the divorce could be a breach of your obligation to keep their personal information confidential. It could suggest to a buyer that the sellers might accept a lower price. When handling divorcing sellers, it’s essential to recognize that their goals and interests may not always align. As a real estate agent representing both parties, this presents a unique challenge because you have a responsibility to both individuals. Make sure to protect yourself and take extra precautions.
If your sellers have legal questions regarding their divorce, make sure to direct them to their attorney. 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. Liability of Agents and Affiliated Agents for Not Exercising Reasonable Care Some states hold brokers personally liable for injuries suffered by those viewing a property if the broker or affiliated agent failed to exercise reasonable care to make a property safe for those invited onto it. Although Georgia has not done so, Georgia courts may well do so in future. Listing Brokers Should Visually Inspect and Recommend Repair of Hazards To be protected from this potential liability, listing agents should perform a thorough visual inspection of the property before inviting anyone to view it. If any potentially hazardous conditions are identified during this inspection, the listing agent should then require the seller to make all such hazards reasonably safe in light of their foreseeable future uses. The owner should be encouraged to fix all of these issues prior to inviting potential buyers onto the property, to ensure that no liability arises. Brokers should perform this preliminary inspection for hazards irrespective of any disclosures or promises of the owner, as the “duty to inspect” is imposed on the owners and probably includes sellers’ brokers and their affiliated licensees. (Georgia courts have ruled both ways.) A broker or owner is not required to discover nor disclose every possible latent defect in the property during this inspection. Instead, he must exercise “reasonable care” to make the property safe in light of the foreseeable use thereof. Examples of potential hazards to look for during this initial inspection include things like rotten stair treads or decking, broken or loose railings or burned-out lights, loose carpet or hanging fixtures, tripping hazards such as uneven sidewalks, exposed wires, and any other conditions on the property that could foreseeably lead to injury. Warning About Any Lingering Dangers In addition to performing a thorough inspection for dangerous conditions, brokers should make sure to give enough warning about any lingering dangers the owner neglects to fix so that those invited onto the property can easily avoid those dangers. If, for example, before an open house a broker notices that a two-story deck has rotten floorboards, that broker should make certain that no one who attends the open house goes out on the deck, or if the buyer is insistent, at least does not go without first being warned of the potential danger. The broker could communicate the warning in several ways, including posting a written sign, verbally warning potential buyers, physically restricting access to the deck by closing the deck off entirely, or doing all of the above. Perhaps the easiest way for brokers to limit their liability in this situation is to provide a written disclosure listing all known latent dangers to each prospective buyer and require each such buyer to sign it immediately before they enter the property. While not the most positive sales technique (except in the case of extreme “fixer-upper” properties where buyers may be enticed by a laundry list of defects), if any injury does result there is written proof that the broker exercised ordinary care by warning the victim of the danger beforehand, and that the victim was probably not exercising ordinary care since he or she clearly ignored that warning. A sample of this type of disclosure is as follows: The undersigned prospective buyers acknowledge that they have been informed of the following dangers and agree to use extreme care to avoid these potentially hazardous conditions: [LIST OF KNOWN DEFECTS]. The previous items are not meant to be an exhaustive list of all dangerous conditions on the property, but rather are those known to the owner/broker based on a visual assessment of the property. Houses Under Construction Houses that are under construction present a heightened risk of injuries. Most builders will not let buyer’s tour homes under construction until the house is almost complete to avoid the risk of claims. If tours are allowed, prospects and buyers are generally required to have a builder or builder representative on the tours. Remember that Georgia is a comparative liability state. If a prospect or a broker goes onto a property without permission, that person may not be able to recover for an injury. That is, the injured party may be more at fault than the owner. Reference: Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (pp. 60-65). BookBaby. Kindle Edition. In Georgia, the distinction between real property and personal property is essential in real estate transactions:
Examples of Real Property:
Examples of Personal Property:
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