Friday, August 3, 2018 / by Matthew Biggers
The Unintended Consequences in Change to GAR Purchase and Sale Contract
Don't be alarmed by this future home sellers and buyers... We have strategies that can help avoid this, including special stipulations added to the contract, internal contract auditing, and in-house contract-to-close file coordinators who stay on top of everything on BOTH sides of the transaction and identify any possible defaults on either side of the table. If you want to hear more about how this WON'T affect you if you engage Team Sterling for your next purchase/sale, give my team a shout at viewatlantahomes.com
The GAR contract no longer gives the Seller a choice of remedies if the Buyer defaults and does not close. Previously, the Seller could choose between accepting the Earnest Money as damages or pursuing any other lawful remedy against the Buyer, such as going to court with a claim for damages or specific performance. Now, the Seller no longer has this choice. Under the new F20, the Seller's only remedy is receiving the Earnest Money as liquidated damages. This means that the parties are agreeing from the outset that the Earnest Money is the only remedy, and the only amount of damages - no more, no less - that the Seller can recover in the event of failure to close due to the Buyer's default. The Seller waives the other available remedies.
On the surface, OUR clients don't need to be too concerned. We have strategies, processes and staff that can help avoid this:
including special stipulations added to the contract, internal contract auditing, and in-house contract-to-close file coordinators who stay on top of everything on BOTH sides of the transaction and identify any possible defaults on either side of the table. If you want to hear more about how this WON'T affect you if you engage Team Sterling for your next purchase/sale, give my team a shout at viewatlantahomes.com
A recent court case ruling has created a seemingly small, but likely widely felt update to the contracts that are used in the majority of real estate transactions. The short of it: buyers will likely be expected to put more earnest money down on a home
(NOTE: this is not the downpayment, but the earnest money that goes towards the downpayment when you close).
(NOTE: this is not the downpayment, but the earnest money that goes towards the downpayment when you close).
On the surface, OUR clients don't need to be too concerned. We have strategies, processes and staff that can help avoid this:
- Special stipulations adding in the ability for a Seller to recover additional damages.
- However, this will mean that the Seller must go to court for any recovery against the defaulting Buyer.
- In-house contract-to-close file coordinators to complete over a 100-item checklist to ensure we have the heads up when any party in the contract is heading towards defaulting.
- When many agents say they have contract-to-close coordinators, they're referring to another independent third party among hundreds of external companies that provide this service. Frankly, it leaves too many chances for disconnects and 'too many independent contractor cooks in the kitchen'.
- Our staff is salaried. Many external companies pay their coordinators ONLY if the file closes, which can result in too many forced transactions. When every professional party in a transaction is incentivized to push a contract through, then how can a consumer's best interest be protected?
including special stipulations added to the contract, internal contract auditing, and in-house contract-to-close file coordinators who stay on top of everything on BOTH sides of the transaction and identify any possible defaults on either side of the table. If you want to hear more about how this WON'T affect you if you engage Team Sterling for your next purchase/sale, give my team a shout at viewatlantahomes.com
