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If the holder is a broker and does not actually have the earnest money in such a situation, the broker is at risk of being sanctioned by the GREC for being a party to the falsification of a real estate contract (since the contract reflects something different than what is actually taking place in the transaction). The 2012 contract has three different checkboxes covering different scenarios regarding when the payment of earnest money is paid or to be paid. One of the checkboxes is specifically for short sale transactions and provides that the earnest money is not to be paid until the buyer receives notice that the short sale has been approved by the seller’s lender (and other lien holders, if any). The new earnest money provision can also be used in transactions where some earnest money is paid at the beginning of the transaction and then additional earnest money is deposited at a later time.
The old earnest money provision also required the holder of the earnest money to deposit the same within five (5) banking days from the binding agreement date. This provision was changed because in some cases (depending on which box is selected), the holder will not even have received the earnest money until well after five (5) banking days from the binding agreement date. In its place, language was included requiring the holder to deposit the earnest money within five (5) banking days from the later of: a) the date it must be paid to Holder hereunder; or b) the date it is actually received by Holder. Let’s look at the example below to see how this section works.
EXAMPLE. Bob the buyer is obligated to send the Holder earnest money of $5,000 not later than 5 days from the date that the Seller’s lender approves a short sale of the property. The Seller’s lender approves the sale on January 15th and Bob is notified that day he must now get the earnest money to the Holder by January 21st. Bob is late in delivering the earnest money and in fact does not deliver it to the Holder until January 24th. By what date must the Holder deposit the earnest money?
ANSWER. In this case the Holder has 5 banking days to deposit the earnest money from the later of the date it was either due or the date it was actually received. Since the earnest money was not received until January 24th, the Holder must deposit the earnest money within 5 banking days from that date. It should also be noted that when the Holder did not receive the earnest money by the date it was due, the Holder should have notified all parties of the buyer’s breach of the Purchase and Sale Agreement.
6. REVISED SECTION ON ITEMS PAID BY SELLER AT CLOSING
The GAR Forms Committee revised this section once again to make it easier for the buyer to use the entire amount being contributed by the seller. Under the revised section the seller’s contribution can now additionally be used for “home warranties, present and future community association assessments and fees” and even to reduce the purchase price of the property or the principal amount of the loan. The only restriction on the use of the funds is that the buyer’s lender, if any, approves the same. If the lender disapproves of the contribution being used for certain purposes and there are excess funds as a result, the extra money is returned to the seller.
REALTORS wanting to ensure that their buyer clients are able to use the entire seller’s contribution should review this issue with the buyer’s mortgage lender well before the closing. While reducing the sales price of the property should always be available to the buyer as a last resort to ensure that the entire seller’s contribution is used, any change in the sales price will likely require that the mortgage loan to go through underwriting. Therefore, if the buyer waits until everyone is sitting at the closing table to figure out how to use the entire seller’s contribution, it may be too late to ensure that it can all be used to benefit the buyer.
7. REVISED COUNTEROFFER FORM (FORM F22)
The Counteroffer Form was revised to try to make it easier and less confusing for REALTORS and mortgage lenders to use. The first change was to remove the counteroffer number from the Form and provide in the Form that “all previous counteroffers are rejected and are not a part of any future agreement between the parties.” This change was made to reduce the instances in which mortgage lenders were asking for copies of counteroffers that had already been rejected and no longer had anything to do with the transaction.
The second change was to try to make it clearer that all counteroffers are essentially proposed amendments to the original unaccepted offer to purchase the property. Upon a counteroffer being accepted, the counteroffer and the original unaccepted offer to purchase the property become the entire agreement of the parties.
Finally, the revised Form tries to make it clear that either party can require the other to sign a clean or conformed copy of the contract prior to closing.
8. REVISED LEASE FOR RESIDENTIAL PROPERTY (FORM F40)
The Lease for Residential Property is one of the few GAR Forms that does not try to balance the rights of landlords and tenants. Instead, it tries to protect the landlord in situations where the landlord is leasing his or her property.
18 I GEORGIA REALTOR JANUARY I FEBRUARY 2012
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