Understanding Contract Survival: Key Differences Between GAR and RE Forms Contracts

Understanding Contract Survival: Key Differences Between GAR and RE Forms Contracts

If something happens AFTER closing, who is responsible? In other words, must a Seller pay for a hone warranty if they agreed to do so in the contract but forgot prior to closing? What obligations “SURVIVE” the contract? Is it different in the Georgia Association of REALTORS (GAR) contract package vs. the RE Forms contract package? 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.

In the world of real estate contracts, the concept of contract survival holds crucial significance. Today, we’ll explore the variances between the Georgia Association of Realtors (GAR) contract and the RE Forms contract, specifically focusing on their survival clauses. So, what exactly does it mean for a provision to “survive” a contract? Let’s dive into the details and shed light on this important topic.

Survival of Contract: What Does it Mean?

When a contract ends, typically at the closing of a transaction, the parties’ obligations towards each other also come to a conclusion. However, there are certain provisions that continue even after the contractual relationship ends. These ongoing obligations are said to “survive” the termination of a contract.

Survival Clauses in the GAR Contract

According to legal expert Seth Weissman, the GAR contract does not specifically mention breach occurrences after closing. However, claims arising after the closing are limited by the principle of merging the purchase and sale agreement with the deed conveyance. This means that unless the purchase and sale agreement explicitly states provisions that survive the closing, they cease to have legal effect. In paragraph C40, titled “Survival of Agreement,” the contract identifies specific elements that survive the closing:

  1. Obligation to pay real estate commission
  2. Warranty of title
  3. Written representations of the seller regarding the property or neighborhood
  4. Buyer’s indemnification obligations related to property inspection
  5. Condemnation section
  6. Section on attorney’s fees
  7. Obligations regarding ad valorem real property taxes
  8. Any obligations agreed upon by the parties to survive the closing

Each of these provisions remains in effect after the closing, ensuring the parties’ ongoing obligations.

Survival Clause in the RE Forms Contract

In the RE Forms contract, the survival clause can be found in paragraph 12.7 of the standard terms. The clause states that unless otherwise agreed in the contract or any other document executed by the buyer and seller, the provisions of the contract survive the closing. This means that the entire contract, unless specified otherwise, remains in force even after the closing.

The Magic Phrase: “This Provision Shall Survive Closing”

In the GAR contract, the use of the phrase “This provision shall survive closing” is crucial for including additional obligations beyond the listed items in paragraph C40. By utilizing this magic phrase, agents can negotiate and establish contractual obligations that extend beyond the closing. It ensures that these provisions are legally binding even after the transaction concludes.

Special Stipulations to Consider

Apart from the survival clause, the GAR contract offers a library of special stipulations. These stipulations allow agents to address specific issues that may arise during or after the closing. For example, survival of conditions or unfulfilled conditions discovered shortly before closing can be handled through these provisions.

In conclusion, understanding contract survival is essential for real estate professionals representing buyers and sellers. While the GAR contract specifies certain provisions that survive the closing, the RE Forms contract deems the entire contract to remain in effect unless otherwise stated. Remember, if you’re working with contracts other than GAR or RE Forms, consult with an attorney to determine the survival clauses applicable to those contracts.

Watch the entire video for more information here:



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