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hi everybody Dana Sparks broker of maximum one Greater Atlanta Realtors and today's contract tip has to do with default on a contract I want to we've covered this issue before but I just want to briefly go over and remind you of the remedies for default based on the purchase and sale agreement that the buyer and the seller go binding under so if a buyer and a seller are binding under the GA our contract form specifically the form 2019 then that form and this default remedy did actually change with the August revision of the GA our contracts August 2018 revision in paragraph c2 is where default is spelled out in the purchase and sale agreement and it says rip paragraph C to a in the GAR purchase and sale F to a one state remedies of seller in the event this agreement fails to close due to the default of the buyer the sellers sole remedy shall be to retain the earnest money as full liquidated damages seller expressly waives any right to assert a claim for specific performance the parties expressly agreed that the earnest money is a reasonable pre estimate of the sellers actual damages which damages the parties agree are difficult to ascertain the parties expressly intend for the earnest money to service liquidated liquidated damages and not as a penalty so that is in the GAR contract in the re forms right now we're just talking about sellers remedies should a buyer default on the contract basically if a buyer fails to close and terminates the contract or just fails to close outside of any contingency that has not that has expired so in the re Forbes contract and this is all spelled out in the standard terms which is re form one under paragraph ten it describes default and it says a party shall be in default if he or she breaches any term of the contract except in the event of a party's failure to close as otherwise stated in the contract neither seller nor buyer shall be deemed in default here under however until and unless such party has been given written notice of its failure to comply with the terms of the contract and thereafter does not cure such failure within three banking days after such receipt buyers default buyers default under any of the terms of the contract may result in the sellers termination of the contract together with the sellers exercise of all rights and remedies available under the law including but not limited to bars forfeiture of earnest money deposit and lawsuits for damages seller may either accept the earnest money as liquidated as full liquidated damages or bring league legal action for actual damages it being agreed by the parties that the actual damages are impossible to calculate sellers right to retain the earnest money is intended not as a penalty but as full liquidate liquidated damages pursuant to official code Georgia annotated 13 - 6 - 7 so what does that mean again for the purposes of this video I'm just talking about sellers remedies for a buyer default on the contract apologize if I did not say that up front so basically what that means is it really depends upon the contract form under which the parties are binding if you are binding under the GAR contract form earnest money is it the buyer and the seller agreed to that when they go finding on that form so what happens if a buyer just doesn't close again outside of any contingencies that have already expired just fails to close for whatever reason either they can't get their their funding or they just change their mind or whatever well again under the GAR the sellers sole remedy is the earnest money under the re form it's the earnest money or they can sue them under any remedy under the law so let's think about throughout the terms of the negotiations after we're binding and let's say the buyer and the seller negotiate for the seller to actually complete and pay for repairs to the property if you're binding under the garb form and the buyer fails to close and the seller has put out thousands of dollars in repairs does that change the issue and the answer is no because the buyer and the seller agreed for the remedy of default for the seller should the buyer fail to terminate under the re forms there is more remedy for them but the seller would incur costs going to court or hiring an attorney to pursue their rights under that contract so it's an agent what do you do in this in this situation as particularly if a seller does agree to do to perform thousands of dollars of repairs to protect the seller well one of the issues might be to negotiate the repairs differently and have them paid for after you know have the seller from the seller proceeds pay to a vendor of the buyers choice the money so forth and so on we've discussed that another issue but if the seller actually is going to perform repairs and there's always a risk that a contract doesn't close for a whole variety of reasons one thing to consider might be for a seller to require additional earnest money so that again in the event of a buyer default that seller would have that earnest money as liquidated damages so how would you do this well one of the things that you would do is look at these special stipulations that are already written for you by attorneys and you have access to a variety of special stipulations and the GAR special stipulation library as well as in the re-form special stipulation library there are a number of special stipulations additional I'm just reading some as an example from the GAR special stipulations library additional earnest money and it talks about the buyer agrees to pay the holder additional earnest money earnest money converted to non refundable deposit earnest money held until a specific time liquidated damages so forth and so on so please take a look at the libraries in the Garr contract packages and in the re forms contract packages so that you word the additional earnest money in a way that does protect the client rather than you trying to write it on your own if you don't find something exactly that you need please consult with an attorney to actually write that special stipulation for you another way to address this issue is request additional earnest money upfront when the buyer and the seller are actually negotiating the contract again this is especially important if the buyer and seller go binding under the GAR contract form we're the only remedy for a seller for a buyer's default is the earnest money as liquidated damages so thank you guys so much for watching again just a quick tip regarding the sellers remedy for a buyer's default on a purchase and sale agreement take a look at your contract forms make sure you understand them and make sure that your buyer and your seller also understand what the remedies are for default before they sign and go binding on this purchase and sale agreement thank you guys so much for watching Dana SPARC Broker of maximum owned Greater Atlanta real terms satisfying your needs with service innovation and education you