But there are other important contingencies that govern the purchase and sale agreement, and today we will examine the financing contingency.

In a nutshell, if a financing contingency exists in an offer to buy real estate, it typically means this: you agree to make the purchase provided you are able to obtain a loan.

This is a critically important clause in your offer. Without it, the offer is assumed to mean that you intend to pay all cash at closing, and very few of us are able to meet that requirement in our home purchases.

And because most of us borrow more than 75% of the amount needed to purchase our homes, being able to qualify for the loan takes on added significance. Absent the financing contingency, the buyer would, at the least, forfeit the earnest money which accompanied the offer. At worst, the seller could possibly sue for damages under a breach of contract claim.

Fortunately, the most widely used contract form in Georgia takes all this into consideration. But there are details that you need to know about before you sign on the dotted line, and we will explore them today.

First, know that the Georgia Association of Realtors (the GAR) works with attorneys to produce a complete set of real estate contract forms for its members to use as they help their customers and clients buy and sell homes. This GAR contract set is updated from time to time, and the most recent set is dated January 1, 2006.

Next, you should know that the GAR Purchase and Sale Agreement has become more and more detailed in recent years. Specifically, it seems that the forms committee has tried to specify more and more ways that a buyer can not use to legally withdraw from the sales agreement due to a contingency. And the financing contingency is one of those ways.

The GAR financing contingency begins by stating "This agreement is conditioned upon buyer's ability to obtain a loan" which seems clear enough. But the clarity ends here and the specificity begins:

* You must specify the exact type of loan you intend to seek, including term, interest rate, amount, and whether the rate is fixed, adjustable or interest only.

* You then must specify that if your loan is denied due to your inability to come up with a down payment or because you have other real estate for sale, then you are deemed to have qualified anyway and stand to lose your earnest money.

* You agree, appropriately, to make application for this loan in a timely manner, and to diligently pursue approval of this loan in good faith.

But here comes the kicker:

* You also agree that, if you are turned down for the loan, you will immediately notify the seller of the loan decision, and

* "provide Seller with a letter from the lender denying the loan detailing all of the reasons for the denial."

The authors of this agreement had, I suspect, one primary reason for including this language in the standard purchase and sale document: this requirement would prevent a buyer who gets cold feet from simply saying "Sorry, my loan application was rejected" without providing any proof.

But the unintended consequence may be this: in the event that a buyer is, in fact, turned down for a loan, this requirement imposes unnecessary obstacles to any possible refund of that buyer's earnest money.

And while I understand the seller's desire to enter into a firm and binding agreement from the very beginning, it is a fact of life that lenders can not and will not grant binding "pre-approval" letters.

Until our system of home lending changes, the buyer must actually bring in a contract and make formal loan application before any lender will spend the money necessary to find out whether or not the buyer can be approved.

In my opinion, it's bad enough for a buyer who, in good faith, tries and fails to get a loan to buy a house. But for that same buyer to have to suffer the indignity of obtaining a letter detailing all the reasons for the denial, then worse, having to supply it to the seller and his broker. Well, that's simply intrusive and unnecessary.

Some would respond that any serious buyer will be fully pre-qualified before even starting their home search, so this shouldn't be a problem.

The fact is that there are literally dozens of loan programs available today, and they change constantly, as do interest rates. It is simply not possible for anyone to get pre-qualified in everything. This problem is particularly acute for first-time home buyers, who may be stretching financially to make the jump to ownership.

Others might argue that any buyer who felt their privacy being threatened could simply strike the offending language from the GAR contract, or replace it altogether with a special stipulation or other language. While that is true, invalidated language in any contract begs the question "why" and simply draws attention to itself.

The bottom line here is that any prospective buyer who contemplates using the standard GAR purchase agreement should review the financing contingency carefully, preferably with their attorney present. Do not sign the contract before you are clear about the type of loan you plan to seek and what your obligations are in the event the loan is turned down.

As with any legal document, I believe you are best served when you are able to discuss the subject fully with your attorney.