Under the new arbitration provision, there are two exceptions to what claims must be arbitrated. The first exception is for earnest money claims. These claims were excluded because the GAR Forms Committee did not want to limit the ability of REALTORS to make reasonable interpretations of contracts in an effort to resolve earnest money disputes or prevent REALTORS from interpleading the funds into court if the dispute cannot otherwise be resolved.
The second exception to the requirement for arbitration is for commission disputes. The Forms Committee excluded these types of claims for two reasons. First, the Committee did not want sellers filing for arbitration as an excuse not to pay a commission. Second, the Committee felt that REALTORS were generally successful in asserting these types of claims in court. Thus, the Forms Committee did not want to fix something that wasn’t broken.
The downside to arbitration is that it is binding with little practical ability for either side to appeal. Therefore, if the arbitrator makes a bad decision, the parties are pretty much stuck with it. Of course, in our judicial system, there is also the risk that a judge will, on occasion, make a bad decision. While litigants in court (unlike participants in an arbitration) have a right to appeal, the high cost of appealing can, as a practical matter, often deter if not prevent an appeal. On balance, the GAR Forms Committee concluded that the benefits of the provision greatly outweighed the detriments.
2. NEW AGREEMENT TO WORK WITH BUYER AS A CUSTOMER (FORM F15)
The GAR Forms have long contained a Customer Acknowledgment Form (Form F6) in which the Customer acknowledged that he or she was not being represented by the REALTOR with whom he or she was working. In addition to this Form, a new Agreement to Work with Buyer as a Customer Form is being released for 2012. This Form is actually a contractual agreement between the buyer and the REALTOR in which the REALTOR agrees to perform ministerial tasks on behalf of the buyer without representing him or her. This Form also contains an agreement to arbitrate disputes between the buyer and his or her REALTOR as well as a limitation of liability in favor of the REALTOR Because of these protections, REALTORS . will want to try to get the customer to sign the new Form rather than using the Customer Acknowledgment Form. Of course, both forms will be available in 2012.
3. CHANGES TO THE TEMPORARY OCCUPANCY AGREEMENT FOR SELLER AFTER CLOSING (FORM F140)
Two important changes were made to the Temporary Occupancy Agreement. The first was to add a bracketed note to the Seller form (F140) that it should not be used in transactions where the occupancy is going to be longer than 30 days. This was done because if the buyer is going to immediately lease the property for more than 30 days, the buyer is technically ineligible to receive mortgage financing as an owner occupant of the property (and instead must apply for more expensive investor financing). The second change was to revise the Form so that any occupancy of the property by the seller after closing is free of charge. This change was made because the rent for the temporary occupancy period is normally paid by the seller to the buyer at closing. Increasingly, mortgage lenders will not allow the seller to give the buyer back money at closing or will treat such payments as a seller concession (and thus impose limits on how much the seller can contribute). If the buyer wants the seller to pay rent, the best way to try to accomplish this is for the sales price to be increased to reflect what would otherwise be rental payments. Of course, the property may not always appraise in such situations resulting in the seller truly occupying the property rent free.
4. NEW PROTECT YOURSELF WHEN SELLING A HOUSE BROCHURE (FORM F16)
GAR is introducing a new “Protect Yourself When Selling a House” brochure in 2012 that will be a companion piece to the existing “Protect Yourself When Buying a Home” brochure. The new brochure gives sellers advice on the seller’s legal obligations in selling real property and tips to sellers on how best to prepare a house for sale. The GAR Purchase and Sale Agreement will now include two check boxes in which the buyer or seller can acknowledge the receipt of the appropriate brochure. Similarly, the GAR seller listing agreements will also include a checkbox in which the seller acknowledges receipt of this brochure.
Both of the GAR brochures not only give good guidance and advice to the buyer and seller, they also help protect REALTORS against claims since the information in the brochures is incorporated into the purchase and sales contract.
5. NEW EARNEST MONEY PARAGRAPH IN THE PURCHASE AND SALE AGREEMENT (FORM F20)
The earnest money paragraph was completely rewritten for 2012 to reflect the new growing reality that in many transactions the holder of the earnest money does not actually receive it until after the parties enter into a binding agreement. Up to now, the GAR Purchase and Sale Agreement simply included an acknowledgement that the holder had already received the earnest money.
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16 I GEORGIA REALTOR JANUARY I FEBRUARY 2012
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