State of Emergency and the GAR Contract

CCK
5 days ago
4 min read

The State of Emergency provision was introduced in the January 1, 2025 and modified in the mid-year 2025 changes in light of what we experienced in January and February 2025. Members (and guests) who attended the GAR Forms Committee meetings worked very hard to balance the rights of Buyers and Sellers - but Mother Nature and the reality of government action continue to point out areas requiring revision.

The History and Explanation

Where is the State of Emergency language in the GAR contracts?

In the C section. In the F201 it is C.4.c.

“Delays Caused by Emergencies: If at any point after the Binding Agreement date the Governor of Georgia declares a state of emergency for the county in which the Property is located, all unexpired time deadlines herein, including but not limited to the Closing Date, shall automatically extend for the number of days the emergency exists in that county, but not more than eight (8) days. Nothing herein shall prevent the parties by mutual agreement from proceeding forward without extending such deadlines. No deadline shall be extended if this Agreement becomes a binding agreement during a state of emergency.”

Why is it automatic?

The nature of the emergency can and has created situations where one or more of the parties cannot create or sign a notice to unilaterally extend deadlines. When they lose internet and electricity and cell service is spotty, they are unable to conduct normal business.

Why does it cover areas that are not really affected by weather?

There are few inarguable things to which we can tie the State of Emergency. The most reliable and undeniable trigger is the declaration of the Governor. It is clear and publicly available. The automatic extension applies only to the counties that are subject to the State of Emergency. The declarations have applied to the entire state in 2025 and so far in 2026 because the government usually acts in an overly broad area and weather can change direction. But again, we are doing the best we can to limit it to areas that are affected or expect to be affected.

What should we do to fix the negative consequences?

The GAR Forms Committee made changes in the middle of 2025 to fix several issues.

It now does not affect contracts that go Binding after the State of Emergency begins. Those parties are presumed to have taken this into account when they set their dates.
It is capped at 8 Days regardless of how many days the State of Emergency actually lasts. The parties are expected to be able to function as the Emergency drags on and we were reacting to the fact that the 2025 State of Emergency lasted the better part of a month which is just not reasonable.

The 2026 State of Emergency - Round 1

The Days

The State of Emergency was declared January 22 and took effect immediately. It is scheduled to end January 29 at 11:59. This is 8 Days which is also the limit of the automatic extension in the contract. How did I get 8 days when the order says it is 7 days? Because the order is counting the days FROM the day it goes into effect. We are counting the number of Days the State of Emergency is in place: 22, 23, 24, 25, 26, 27, 28, and 29. That is 8 Days.

Both of the winter states of emergency in 2025 were extended past their original days. Even if this happens, the 8 Day cap means extensions of this State of Emergency will not affect our contract deadlines or closings.

If this State of Emergency ends and another is called, that is a new State of Emergency and another 8 Day automatic extension. In 2025, one State of Emergency ended at midnight and another was declared around 7:00 a.m. the next morning. Those would be 2 separate States of Emergency.

Deadlines Affected

It automatically extends all deadlines, including the Closing Date.

BUT, it currently does not survive closing. Why does that matter? There was a contract that closed prior to the State of Emergency but the Seller kept possession after Closing. The issue? The Seller's mover canceled because the moving date was in the middle of the storm. The Seller was unable to get another mover to move them because none of the moving companies were operating. This is something that should probably be addressed one way or the other in future revisions to the GAR Purchase and Sale Agreements or to the Seller Possession After Closing Exhibit.

Changing the Agreement

The Buyer and Seller can always agree by written amendment to modify or waive the automatic extension.

Keep All of the Original Dates:

Buyer and Seller agree that all of the terms, conditions and time periods set forth in the above-referenced Agreement shall remain in full force and effect as on the Binding Agreement Date and will not be changed due to the State of Emergency declared on ____________, 2025.

[This keeps open the possibility that there may be another State of Emergency that does affect the Buyer or Seller's ability to perform.]

Change Some But Not All of the Dates:

Buyer and Seller agree that the following deadlines and dates set forth in the above-referenced Agreement shall remain in full force and effect as on the Binding Agreement Date and will not be changed due to the State of Emergency declared on ____________, 2025:

☑ Due Diligence Period

☑ Financing Contingency Period

☑ Appraisal Contingency Period

☑ Closing Date

☑ Possession Date

☑ Other: __________________________

[This keeps open the possibility that there may be another State of Emergency that does affect the Buyer or Seller's ability to perform.]

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