Sometimes a party to a Georgia Association of REALTORS (GAR) or RE Forms contract may be in DEFAULT even though the issue at hand may not be their personal FAULT over which they have direct control. The following is a synopsis of the latest episode of “Real Estate Made Crystal Clear” with our very own Dana Sparks. You can watch the video in its entirety below.
When it comes to real estate contracts, the difference between fault and default can be a source of confusion for many parties. In this blog post, we will explore what constitutes fault and default in a contract, and why a party might be at default even if it is not their fault.
Financing Contingency Exhibits
One common example where a buyer might be at default is with financing contingency exhibits. In the GAR purchase and sale contract package, the seller gives the buyer a certain number of days to convince a lender to lend them the money. If they are not able to do that, the buyer must send a notice of termination to the seller and prove it with a loan denial letter. However, the reason that the lender puts on that loan denial letter can make a significant difference in determining fault and default.
Other Examples of Default
There are other examples in the contract where a party not fulfilling their obligation may constitute a default, even though it is not necessarily their fault. For instance, if a buyer is getting down payment assistance funds and they don’t get funds, it is not their fault, but it will constitute a default. Another example could be a seller having a gap in the chain of title, which might not be the seller’s fault, but still constitutes a default.
Remedies for Default and Breach of Contract
Default and breach of contract have different remedies depending on the nature of the breach. For example, if it is a material breach, it might lead to more severe consequences.
Staying in Communication
It is essential to encourage clients and customers to stay in consistent and ongoing communication with all of the parties involved in a real estate transaction. By doing so, they can ensure a successful closing.
In conclusion, fault and default are two concepts that often cause confusion in real estate contracts. A party might be at default even if it is not their fault, and different breaches of contract can have different remedies. It is crucial to stay in communication with all parties involved to ensure a successful closing.
Watch the entire video for more information here: