The GAR default clause is narrower than you think
Georgia rule. GAR F201 paragraph C.2 makes retention of the earnest money the seller's sole remedy on buyer default and expressly waives any claim for specific performance. The defaulting party also owes each broker the commission it would have earned.
State the trap outright: marking "the seller may sue for specific performance" is the most common error on this clause. Under the GAR contract the buyer keeps specific performance.
Worked example. Price $400,000, earnest money 1%: 1% × $400,000 = $4,000, and that is what the seller retains. $40,000 moves the decimal and computes 10%. The full $400,000 treats the case as a suit for the price, which the sole-remedy language forecloses.
Specific performance and its neighbors
Specific performance orders a party to fulfill its obligations. Georgia decrees it whenever damages at law would not be adequate compensation — the standard analysis for land, because every parcel is unique.
- Punitive damages punish reckless or malicious conduct, not ordinary breach.
- Quantum meruit gives restitution for the reasonable value of services where no enforceable contract exists.
- Reformation corrects language so an instrument reflects the agreement actually reached.
Liquidated damages, not penalties
O.C.G.A. 13-6-7 binds parties to agreed damages unless the agreement violates a principle of law. Georgia's three-part test: is the injury difficult to estimate, did the parties intend liquidated damages, and is the amount a reasonable pre-estimate of probable loss.
A sum set above the actual loss to deter breach is a penalty, which is what makes such a clause unenforceable. Tying the sum to the broker's commission is arbitrary, and no statute requires notarization or recording.
Rescission for fraud
O.C.G.A. 13-4-60 requires the defrauded party to promptly, upon discovery of the fraud, restore or offer to restore whatever he received. No judicial declaration is needed — rescission may be unilateral or mutual — and performing through closing forfeits the promptness the statute demands. The seller's consent is not required, though under O.C.G.A. 13-5-30(b) the rescission must itself be written and signed.