Georgia Real Estate Contracts: What the Exam Tests
Georgia contract law for the salesperson exam — GAR forms, purchase and sale agreements, due diligence periods, and default remedies.
Contracts appear throughout Georgia's 152-question exam. Here's what you need to know about Georgia contract law and the GAR (Georgia Association of Realtors) forms system.
GAR Contract Forms
Unlike Texas (where TREC promulgates mandatory forms), Georgia uses GAR (Georgia Association of Realtors) forms — voluntary but industry-standard forms used in the vast majority of Georgia transactions.
Common GAR forms: - Purchase and Sale Agreement (PSA): The primary residential sales contract - Buyer's Brokerage Agreement - Exclusive Seller Listing Agreement - Amendment to Purchase and Sale Agreement
Non-GAR attorneys or parties may draft their own contracts, but most Georgia residential transactions use GAR forms.
Georgia Purchase and Sale Agreement: Key Provisions
Due Diligence Period: Georgia's PSA includes a due diligence / inspection period. Unlike Texas's option period (flat fee for unrestricted right to terminate), Georgia's due diligence period allows: - Buyer to conduct inspections - If buyer is dissatisfied, buyer may terminate and receive earnest money back - Buyer must terminate before the due diligence period expires — cannot terminate after
Earnest Money: - Specified in the contract; typically 1-3% of purchase price in Georgia - Held in escrow by the broker or closing attorney - If buyer terminates during due diligence: earnest money returned to buyer - If buyer defaults after due diligence: seller may retain earnest money as liquidated damages
Closing Date: The parties set a closing date. Either party can declare the contract void if closing doesn't occur by the agreed date (unless extensions are agreed upon in writing).
Essential Elements of a Valid Contract
All real estate contracts in Georgia must have: 1. Offer and acceptance (mutual assent) 2. Consideration 3. Legal capacity (18+, competent) 4. Legal purpose 5. In writing (Statute of Frauds)
Georgia Statute of Frauds: Real estate contracts must be in writing and signed by the party to be charged to be enforceable.
Default Remedies
Buyer defaults: - Seller may terminate and retain earnest money as liquidated damages - OR seller may seek specific performance (compel the sale)
Seller defaults: - Buyer may terminate and recover earnest money - OR buyer may seek specific performance
Specific performance: Available for both buyers and sellers in Georgia because real estate is unique property.
Option Contracts in Georgia
An option contract gives a buyer the right (but not obligation) to purchase at a set price within a set period. The option fee paid is: - Non-refundable if buyer declines to exercise the option - Applied toward the purchase price if buyer exercises the option (depending on contract terms)
Common Exam Scenarios
Q: A buyer's due diligence period expires at midnight Saturday. On Friday, the buyer's inspector finds foundation cracks. The buyer notifies the seller on Sunday (after deadline). Can the buyer terminate? A: No — the due diligence period has expired. The buyer's right to terminate for inspection reasons has passed.
Q: A GAR Purchase and Sale Agreement was signed on Monday. The seller cannot close by the agreed date. The buyer wants to force the sale. What remedy is available? A: Specific performance — the buyer can sue to compel the seller to complete the sale.
[Practice Georgia contract questions at CARealestate.com/states/georgia](https://carealestate.com/states/georgia)
Ready to test your knowledge?
Start with 5 free CA real estate exam questions — no signup required.
Take the Free Quiz →