Georgia GAR Contract Explained: Due Diligence, Earnest Money, and What Happens When It All Goes Wrong

The number of Georgia buyers who lose their earnest money because they misunderstood one clause in the GAR contract is not small. The most common scenario: a buyer submits an amendment requesting repairs, assumes the negotiation pause freezes the clock, and wakes up the next morning to discover their due diligence period expired while the seller's response was still pending. The money is gone.

The Georgia Association of Realtors Purchase and Sale Agreement governs virtually every residential transaction in this state. Understanding how its mechanics work — particularly the due diligence period, earnest money handling, and the 2026 updates — is not optional for anyone buying a home here.

What the Due Diligence Period Actually Is

The due diligence period in the GAR contract functions as a unilateral option. During the negotiated timeframe — typically 7 to 14 days in competitive markets — the buyer has the absolute right to terminate the contract for any reason and receive a full refund of their earnest money. No explanation required. No negotiation needed.

Once the due diligence period expires, that option evaporates. From that point forward, the earnest money is "hard." Terminating the contract outside of the remaining contingencies (financing and appraisal, if included) means forfeiting the deposit.

The critical point buyers miss: submitting an amendment requesting repairs does not pause or extend the due diligence clock. The two processes are entirely independent. If you submit a repair request, the seller ignores it or counters with unacceptable terms, and your due diligence period expires before you formally withdraw from the contract — you are locked in. The only way to exit the contract during the due diligence period is by delivering a formal written notice of termination before the period ends, down to the minute.

The 2026 GAR Contract Updates You Need to Know

The 2026 GAR forms introduced several structural changes that directly affect buyer risk.

Unilateral extension rights (Section B.4.a): The buyer's right to unilaterally extend the closing by eight days now applies only when the delay is caused by the lender or the closing attorney. The seller's parallel right to extend applies only for title-curing issues or closing attorney delays. Critically, only one attorney-related extension is permitted per transaction total — the first party to invoke it exhausts the option for both sides.

Seller warranty on encroachments (Section B.1.a): The seller's warranty now covers only existing structures. If you plan to add a fence, retaining wall, mailbox, or walkway, confirming that the proposed structure is permissible within utility, sewer, and drainage easements is your responsibility — and that confirmation needs to happen during the due diligence period or via a specific survey contingency, not after closing.

Earnest money with the closing attorney: When the closing attorney holds the earnest money, specific GAR exhibits govern the arrangement. The buyer must use Form F510 and Form F511. Delivery to the attorney must happen within two business days of the Binding Agreement Date. The attorney must agree to serve as holder within three business days of receiving the full contract. Deposit via wire transfer must occur no later than five banking days from the Binding Agreement date. These are not suggestions — missing the deposit timeline is a material contract default.

What Earnest Money Forfeiture Looks Like

First-time buyers frequently assume that walking away from a deal after due diligence simply means losing their deposit — a painful but limited outcome. Recent GAR contract revisions have largely removed the seller's ability to pursue "specific performance," the legal remedy that would have forced you to complete the purchase in court. The contract now explicitly defines earnest money forfeiture as the agreed "liquidated damages" for a buyer breach.

That is genuinely better than being sued for the purchase price of the home. But losing $5,000 to $15,000 in earnest money — which is a typical deposit amount in the Atlanta market — is a devastating outcome for a first-time buyer who was already stretching to cover a down payment and closing costs. Several specific scenarios trigger this loss:

• The due diligence period expires and the buyer terminates without delivering written notice before the deadline
• The buyer fails to secure financing and the financing contingency was not properly drafted or has already lapsed
• The buyer simply gets cold feet after due diligence and walks away without formal termination

One procedural note that can provide relief: if the contractual deadline falls during a state of emergency declared by the Governor specifically for your county, the 2026 GAR contract automatically extends all time deadlines for the duration of the emergency. This safety valve applies in hurricane and extreme weather situations but has no relevance to ordinary circumstances.

How Earnest Money Is Held

In Georgia, earnest money is held by a real estate broker or the closing attorney in a designated escrow or trust account. The 2026 GAR contract requires that the funds be deposited in a U.S. financial institution.

Disputes over earnest money disbursement — for instance, when a buyer believes they properly terminated during due diligence and the seller disagrees — are resolved by the holder following the written instructions of both parties or, absent agreement, by a court or through arbitration. The closing attorney or broker holding the funds cannot unilaterally release the money to either side in a disputed situation without legal authorization.

What Buyers Should Do During Due Diligence

The due diligence period is your primary protection in a Georgia transaction. Use it deliberately:

1. Schedule all inspections within the first three days. You need time to receive reports, get contractor estimates for any defects, and make an informed decision before the period ends.
2. Track the exact expiration time. Georgia contract deadlines run to the end of the business day specified. Know the exact date and time.
3. If you want to negotiate repairs, start immediately. The repair negotiation and the due diligence period run concurrently. Draft your amendment early, giving the seller time to respond before your deadline.
4. Decide formally, in writing. If you want to terminate, deliver a formal written notice of termination before the deadline. If you want to proceed regardless of repairs, confirm that decision and proceed. There is no middle state.
5. Confirm your survey situation. If you plan any additions to the property, verify clearances within easements now.

The GAR contract is well-designed for an experienced buyer who reads it carefully. The problem is that first-time buyers in Georgia typically receive it through their agent and rely on a verbal explanation of the highlights. That is not enough. Reading Section B in its entirety — particularly the timing provisions — is the minimum standard.

For a step-by-step walkthrough of the Georgia contract timeline, earnest money worksheets, and the complete due diligence checklist tailored to this state, see the Georgia First-Time Home Buyer Guide.

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