Download a Copy:
Here’s What to Expect with the Contract Deadlines
Deadlines drive the process once the contract is Accepted and Binding. The above dates are typical milestones in the home buying process. If you are the Buyer, this is YOUR show and your team needs to hit their marks so your Earnest Money is not put at risk. The explanations below have been prepared based on the 2015 version of the Georgia Association of Realtors (GAR) residential real estate contract forms.
Deadlines, Days and Times of Day
- Offers have Time Limits – Contracts have Deadlines.
- Contract Deadlines are measured in Days – which end at midnight.
- Contract Days are Calendar Days unless otherwise specified in a Special Stipulation. Business Days are very hard to define.
Binding Agreement Date:
The Binding Agreement Date is the date when an offering party receives written confirmation of the other party’s total acceptance of the presented offer terms with no changes. The keys here are:
- Written Confirmation
- Total Acceptance with NO CHANGES
If anyone is making changes, you are still in the counter offer process. Until there is a set of offer terms that gets accepted by the other party without change AND within the Time Limit of Offer, there cannot be an Accepted Contract. Once this happens, that Accepted Contract becomes Binding when both Buyer and Seller have copies of the final accepted terms and the last person to receive their copy writes in the Binding Agreement Date. The Acceptance Date and the Binding Agreement Date do NOT have to be the same day.
The Binding Agreement Date is Day 0 (zero). In order to give specific Contract Deadlines, we will assume the Binding Agreement Date is the 2nd.
Date Earnest Money is Due:
This date is typically specified as a certain number of days from the Binding Agreement Date. If this number is 2 days, then the Earnest Money is due before midnight on the 4th. Failure to provide this could constitute Default.
Source of Funds is Due:
This date is typically specified as a certain number of days from the Binding Agreement Date. If this number is 5 days, then the Earnest Money is due before midnight on the 7th.Failure to provide this could constitute Default.
Due Diligence Period Ends:
This date is specified as a certain number of days from the Binding Agreement Date. If this number is 10 days, then the Due Diligence Period expires at midnight on the 12th. So, what happens at 12:01am on the 13th? The Buyer is deemed to have accepted the property “as-is” AUTOMATICALLY. This means there will be inspections, negotiations and contractor estimates going on prior to this deadline to come to an agreement regarding property condition. If no agreement is reached prior to the expiration if the Due Diligence Period, the Buyer can either send Seller written notice of termination or be willing to accept the property “as is” (in which case the Buyer does not need to take any action).
In builder and relocation contracts, this process will probably be different. Check the specific language in your contract.
Appraisal Contingency Ends:
This date is specified as a certain number of days from the Binding Agreement Date. If this number is 18 days, then the Appraisal Contingency expires at midnight on the 20th. So, what happens at 12:01am on the 21st? The option to ask the seller to reduce the price down to an appraised amount lower than the Purchase Price is forfeited. In order to request an adjusted Purchase Price from the Seller as a result of the appraisal, a written amendment making such request must be submitted to the Seller along with the appraisal PRIOR to the deadline.
If you are the Buyer, make sure your lender gets the appraisal back in time to submit an amendment to the Seller if necessary. The Seller does not have to grant an extension and you do not want to be forced to beg for one.
Financing Contingency Ends:
This date is specified as a certain number of days from the Binding Agreement Date. If this number is 21 days, then the Appraisal Contingency expires at midnight on the 23rd. So, what happens at 12:01am on the 24th? The option to get out of the contract due to loan denial is forfeited. In order to terminate the contract as a result of loan denial, a written letter citing the reason(s) for loan denial must be received from the Lender and submitted to the Seller PRIOR to the deadline.
If you are the Buyer, make sure your lender gets the loan approval from Underwriting with some time to spare. More importantly, if your loan is going to be denied, make sure your lender issues a complete and conforming loan denial letter BEFORE the deadline so it can be submitted to the Seller. The Seller does not have to grant an extension here and you do not want to be forced to beg for one.
Closing Dates are not suggestions or “on or before” dates (unless specified as such). There is language in the contract that allows for an adjustment if the date specified in the contract falls on a weekend or bank holiday (yes, in the heat of the moment this can happen).
This is usually stated as a specific date or “At Closing” (which is a date and a mutually agreed upon scheduled time).
Clients will sometimes ask “Is there anything in this Georgia real estate contract form I need to be worried about?” The saying “Hindsight is 20/20” is very relevant in real estate transactions. Most consumers underestimate the complexity and diversity of issues that can surface when buying or selling a property. Agents are also not mind readers with x-ray vision and super powers.
With different real estate contract forms being used in Georgia, Buyers and Sellers are increasingly asking what the differences are between various form contracts. Not all agents use the same forms. In answering this question, agents have to be very careful not to say anything that could accidentally misinform their client. Agents can answer general questions about the contract based on experience as an agent but specific legal questions are beyond their expertise and should be answered by an attorney.
Thanks again to our Contracts Specialist, Lynn LeCraw, for helping explain the pitfalls well-meaning agents can fall into as they try to serve their clients.
“I am not an attorney”
This should be the 1st thing coming out of your agent’s mouth! They are not dodging responsibility. There are just numerous unintended consequences with contract language. We get to see case law constantly where people are wrestling with some issue – many times it stems from miscommunication.
“You should carefully read any real estate contract before you sign it to make sure you understand what you are agreeing to”
A form contract may not address every issue or point that is important to you. If anything is missing, it should be added in as a special stipulation (drafted by an Attorney – not a real estate agent conducting the unauthorized practice of law).
“I can try and answer general questions about the GAR form contracts based upon my experience with these forms as a REALTOR. However, specific legal questions are beyond my expertise and should be answered by an attorney.”
Not all real estate form contracts are the same and different form contracts address the many issues that arise in real estate contracts in different ways.
“The GAR form Purchase & Sale Agreement is the one I am most familiar with and use in my day-to-day real estate business. I have found that as a general rule, it has served my clients well.”
Here is GAR’s approach to real estate contracts. This disclosure provides as follows:
“GAR Forms: The Georgia Association of REALTORS, Inc. (“GAR”) issues certain standard real estate forms. These GAR forms are frequently provided to parties in real estate transactions. No party is required to use any GAR form. Since these forms are generic and written with the interests of multiple parties in mind, they may need to be modified to meet the specific needs of the parties using them. If any party has any questions about his or her rights and obligations under any GAR form, he or she should consult an attorney. The parties hereto agree that the GAR forms may only be reproduced with sections used in accordance with the licensing agreement of GAR. While GAR forms may be modified by the parties, no GAR form may be reproduced with sections removed, altered or modified unless the changes are visible on the form itself or in a stipulation, addendum, exhibit or amendment hereto.”
Sometimes form real estate contracts are one-sided and only protect the interests of the Buyer or the Seller. The GAR form contract tries to give some protection to both the Buyer and Seller while also protecting the real estate brokers in the transaction from client expectations beyond the terms in the Buyer Agency Agreement.