The Midyear Change to the GAR Contract  

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The Midyear Change to the GAR Contract  

There is a fundamental change in the GAR contracts that came out on 8/1/18.

A recent court case found the liquidated damages provision in the GAR contract is unenforceable as written. The current contracts provide for the Seller to accept the Earnest Money as liquidated damages OR pursue other remedies. The courts found that in order to have Liquidated Damages, they must be agreed by all parties in advance and be the sole remedy.

The 8/1/2018 revisions to the contracts state the Earnest Money is Liquidated Damages and the Seller does not have the option of alternate remedies (i.e. suing the Buyer in breach for specific performance and/or losses incurred by the Sellers). If the Seller does not want to accept the Earnest Money as Liquidated Damages, they will need to add a special stipulation for the removal of the Liquidated Damages clause and insert other legal remedies during negotiations.

As a result of this change, we expect to see larger amounts of Earnest Money as the agents and Sellers start to understand this impact of this change. If you have any questions about this change, please contact us at

Written by Kati Heller, Managing Attorney at McManamy McLeod Heller, Intown Office.

*For informational purposes only. Not to be relied upon as legal advice. Nothing in this blog should be construed as creating an attorney-client relationship. MMH is not responsible for, does not endorse or accept liability for any externally linked site or its content. MMH does not give any representation regarding the safety, reliability or accuracy of the content or materials contained on any external website.