Georgia Real Estate - Section 12 Unit 2
What's the definition of a marketable title?
A title that is clear and free of encumbrances
How does the EMD differ from the down payment?
-Earnest money can be lost if the buyer defaults on the contract, whereas the down payment cannot -Earnest money is paid up front, whereas the balance of the down payment is paid at closing
What goes in the Material Relationship Disclosure section on the GAR F201 Purchase and Sale Agreement?
Any conflict of interest a licensee has with the clients or property
When does the property officially transfer to the buyer?
At closing
When is the balance of the down payment due?
At closing
An as-is clause is designed to alert the ______ that they're responsible for determining the condition of the property and for making any repairs.
Buyers
What does the Disclaimer on page four of the contract mean?
Buyers should do their own research and not hold brokers responsible for information the experts should tell them.
Which of the following conducts closings in Georgia?
Closing attorney
Which of the following determines who receives the earnest money when a contract terminates?
Contract
Indicates the amount of money the buyer is submitting up front as a show of good faith
Earnest Money
All sales contracts are contingent on financing.
False
Buyer only have the right to have access to the property during the due diligence period.
False
Buyers have two choices when it comes to accepting the property: Accept the property as is or terminate the contract.
False
Keira explained that because she would work solely for Donny and Linda, she wouldn't be able to cooperate with the seller and the seller's agent.
False
Sellers must complete all agreed-upon repairs prior to buyer move-in.
False
The Brokerage Relationships section is where the brokerage office address is written.
False
The Material Relationship Disclosure is where the buyers write down if they currently own property.
False
The buyer doesn't have to provide the earnest money by a specified date as long as it's deposited before the closing date.
False
The buyer pays all of the closing costs
False
The closing attorney represents the buyer at closing
False
The seller sets the closing date.
False
For which properties is the seller required to present that disclosure to the buyer?
For any residential property built before 1978
What does the Warranty of Title (aka Warranty) in a real estate sales contract say?
The seller is legally able to deliver good and marketable title to the buyer at closing.
On page two of the GAR F201 Purchase and Sale Agreement under the Purchase and Sale paragraph, there's a section called "Warranty," which other sales contract forms may call "Warranty of Title." What is this in reference to?
The seller promises that the property has marketable title.
The _______ leaves no doubt as to which property you're buying, and which property the seller wants to ______. We can use a recorded _____, a _____ and ______ description, or simply reference the _____ book at the county courthouse where the deed's recorded.
Legal description Convey Plat metes Bounds Deed
Specifies the buyer's offer amount, including the down payment
Purchase Price
Your seller client must include a lead-based paint disclosure if her home was built prior to what year?
1978
In Georgia, what does due diligence mean in a real estate transaction?
Buyers will thoroughly investigate the property while retaining the right to terminate the sales contract if the results are unsatisfactory.
Specifies how much the buyers would like the sellers to contribute at closing
Closing Costs
Notes the date the property will convey to the buyer and the date the buyer would like to move in
Closing Date and Possession
The listing broker must fill in his or her own information in the Brokerage Relationship section.
False
Why is it important that the legal description appears in real estate documents?
It precisely locates the property and its boundaries
States the requirement for a lead-based paint disclosure for properties built before 1978
Lead-Based Paint
A clause stating that a buyer will accept the property in its current state
Property Sold "As-Is"
What is a down payment?
The amount of money the buyer plans to bring to the table as part of the closing costs
Which of the following statements about a buyer accepting a property in "as-is" condition is true?
The buyer retains the right to have the property inspected
What does "Time Limit of Offer" refer to?
The time limit for the sellers to respond to an offer
As Donny and Linda's agent, Keira represents them and only them in the transaction.
True
After a fierce bidding war with three other potential buyers, the Carsons enter into an agreement that includes $2,000 earnest money. When the sale is later terminated, the earnest money goes to ______.
Whichever party it belongs to based on the agreement terms
Lead-Based Paint
"What about this lead-based paint hazard notice?" Linda asked. "That applies to properties built before 1978," Keira said. "If it applied to us, I'd be required by federal law to give you a federal lead-based paint disclosure and an EPA pamphlet explaining that lead poses health issues, and that properties built before 1978 may have lead in the paint." "Glad ours is newer than that," Linda said, then blushed. "Ours. I guess it's not ours, yet." Donny gave Linda's shoulder a squeeze, then turned to Keira. "No red flags. Shall we go ahead and sign?" "Yes, that would be great," Keira said. "Both signatures on one copy, please." Donny and Linda signed, and then Keira continued. "I've checked that you've received the notice, then, but we also need to discuss this as-is clause."
Why does Keira select the GAR F201 Purchase and Sale Agreement form for Donny and Linda's situation? There are two correct answers.
-It's the statewide sales contract form for most residential resale properties -It's the contract form her broker has approved
Earnest money must be paid in the form of a cashier's check.
False
Property Sold "As-Is" Unless this Agreement is Subject to Due Diligence Period
"As-is?" Linda asked. "Yes," Keira said. "Basically, if you accept the property 'as-is,' you're agreeing to buy the property just the way it is. It's like you're saying, 'We get what we get.'" "Yes," Keira said. "Even though there isn't a specific seller disclosure form required, common forms are available. Either way, the seller's required to disclose any latent, or concealed defects that the seller knows about. And you can still do an inspection, just to be sure. While we're on the topic of disclosures, we'll be on the lookout to receive an insulation disclosure from the seller, which will detail the type, thickness, and R-value of the home's insulation. This is required by the Federal Trade Commission. "All right, we'll put in a 15-day due diligence period, to give us time to order inspections. After that 15-day period is up, if we haven't brought up any issues, it'll be assumed that you're accepting the property as-is." "If we do find an issue and the seller agrees to repairs," she told them, "these must be completed prior to closing unless otherwise agreed, using appropriately licensed and certified contractors, and any required permits must be obtained. If the seller doesn't make agreed-upon repairs, we can either compel the seller to do so, or take any remedy offered by default, or extend the closing date up to five days to allow the seller to complete the repairs." "What are the default remedies?" Linda asked. "Good question," Keira said. "If the seller defaults in any way, we have the option to pursue any lawful remedy or order the seller to pay liquidated damages to the broker. Of course, if we're in default, the seller has the option to retain our earnest money, or sue for specific performance."
GAR F201 Purchase and Sale Agreement: Inspection, Lead-Based Paint, and "As-Is"
"Let's move on to the Inspection and Due Diligence section now," Keira said. "This section lets you know that you have the right to inspect the property and neighborhood for any conditions that you may find objectionable. Here are some additional disclosures I always like to provide to buyers: the website for the Georgia Violent Sex Offender Registry, and copies of two brochures: 'Protect Yourself When Buying a Home' and 'What Buyers Should Know About Flood Hazard Areas and Flood Insurance.' Also, you should be aware that it's your responsibility to order a termite inspection—which I highly recommend. I know this is a lot of information, so please take your time going over it," Keira said, handing the pamphlets to the couple. Donny and Linda spent several minutes going over everything. Linda asked, "What's a due diligence period?" "It's the window of time you give yourself to perform inspections and research related to the purchase, and gives you the right to possibly terminate the contract or negotiate additional terms if an issue is discovered. The time period is commonly seven to 21 days. It's not mandated by law that you do this, but it's a good idea. "Also," Keira continued, "recent changes allow buyers to have unlimited right to access the property—even after the due diligence period ends—to measure the place, meet with contractors and the like, make sure agreed-upon repairs have been made, etc. Of course, access must be at reasonable times. Those details are under the Corresponding Paragraphs section of the contract." The couple nodded.
Purchase and Sale Agreement: Agency and Brokerage, Limited Time of Offer
"Now we're on to the Brokerage Relationships section. This is basically where we clarify the agency roles in the transaction. If I were representing you as well as the sellers, I would check the box to clarify that I'm acting as a dual agent. However, since I am solely representing you, I'll fill in my name and check the box that indicates I am representing you as my client." Keira filled in and checked off the appropriate box. "I'll fill in the listing broker's information as well."Linda asked, "What's the 'Material Relationship Disclosure'?""Oh, that's where I'd disclose any potential conflict of interest," Keira responded. "Say, if you were my sibling, or if I had a personal interest in the property being sold.""Next, we'll set a time limit for the offer, if you want to," Keira said. "Buyers do that when they don't want to wait around for a response from the seller—they may have other properties they'd like to bid on if that particular seller's not interested. Also, it keeps the offer from hanging out there in limbo.""How much time do we give the sellers?" Linda asked. "Sometimes it depends on the market, but generally two to three days is enough time.""Let's do three days," Donny replied. "Keira referred the couple back to the contract. "Now, on page four in section 10, here is a disclaimer summarizing that although I do represent you, I'm not responsible for advising you on property matters other than what's covered in this agreement. Basically, it's telling you to look to a licensed professional if you've got a question about the roof or the HVAC system," she said."And that about does it for this part of the contract. Just initial here at the bottom—we always initial each page, to prevent substitution of any pages by either
The period of time for the buyer to perform inspections and research related to the purchase
Inspection and Due Diligence
If the buyer is putting earnest money down, which of the following statements is true?
The buyer must specify the exact amount in the contract
What is due diligence?
The buyer's obligation to thoroughly investigate the property while retaining the right to terminate if the results are unsatisfactory
Why is it so important that the legal description be captured correctly in the sales contract?
The legal description leaves no doubt as to which property is being conveyed
Why are the buyer and seller asked to initial each page of the sales contract?
To prevent the substitution of any pages by either party
Buyers don't have to put earnest money down.
True
If the buyer is putting earnest money down, the buyer must specify the exact amount in the Earnest Money section of the GAR F201 Purchase and Sale Agreement.
True
If the seller doesn't make agreed-upon repairs prior to closing, the buyer can seek specific performance or terminate the agreement.
True
Sellers are required to disclose to the buyer any latent or concealed defects they're aware of.
True
The GAR F201 Purchase and Sale Agreement is set up so that the fields to be completed are as short and simple as possible.
True
The earnest money is credited toward the purchase price at settlement.
True
The seller can continue to live in the property even after closing
True