Georgia Real Estate Contract: Different Types and Key Terms to Include

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What is a Georgia Real Estate Contract?

A Georgia real estate contract, often called a residential purchase and sale agreement, is a legally binding contract that is entered into by two parties (a buyer and seller) when transferring the ownership of real property.

The contract is drafted when a buyer makes an offer on a property that is for sale by a seller. Once the seller accepts the offer, the contract becomes legally binding and enforceable as long as it adheres to all applicable real estate and contract law.

A real estate contract must include specific details about the transaction in addition to tasks and requirements that must be met to finalize the deal. It is common to see the following issues addressed in a real estate contract:

• Agreed upon purchase price
• Description of the property
• Contingencies
• Disclosures
• Deadlines and closing date

Common Georgia Real Estate Contracts

There are several types of Georgia real estate contracts that each serve a different purpose. These contracts include:

• Residential real estate contract. Used when buying or selling a piece of land or a building that will be used for housing.
• Commercial real estate contract. Used when buying or selling a piece of property or a building that is zoned for operating a business like a store or an office building.
• Real estate assignment contract. Used when purchasing investment properties because this agreement allows the buyer to assign the contract to a second buyer.
• Lease agreement. Also called a rental agreement, this contract is used when a property owner wants to rent their property to a tenant.

When purchasing residential real estate in Georgia, the most common contract used is the Georgia Association of Realtors purchase and sale agreement. This form is approved by the association and includes all necessary components of a valid real estate contract.

4 Essential Elements of a Georgia Real Estate Contract

In Georgia, there are 4 essential elements that make a real estate contract valid and enforceable. These elements are:

1. Mutual agreement or assent between the parties to enter the contract
2. A valid offer by the buyer and acceptance of the offer by the seller
3. Adequate consideration which is the exchange of items of value
4. A legal purpose and legally competent parties

If any of these elements are missing from the contract, the contract will be deemed invalid and unenforceable by law.

Is Georgia a Buyer Beware State?

Yes. Georgia follows the laws of caveat emptor, commonly called “buyer beware”. This means that buyers cannot win a fraud claim against a seller for failing to disclose a defect in the property if the defect could have been found by inspection. This principle puts the burden on the buyer to ensure that thorough inspections of the property are conducted prior to agreeing to purchase the house.

Can a Buyer Back Out of a Real Estate Contract in Georgia?

It is possible for a buyer to back out of a real estate contract in Georgia because buyers are protected by contingencies within the real estate contract. A contingency is a term that must be met to finalize the sale of the property. Common contingencies include the appraisal contingency and the financing contingency.

Many Georgia real estate contracts also include a due diligence period. During the due diligence period, a buyer can terminate the contract for any reason. This gives buyers the time to complete a home inspection, research the neighborhood, and ensure that they are committed to purchasing the home.

Due diligence periods are negotiable but the most common time frame for this period is between one and two weeks.

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