SOLD SIGNS

Many licensees customarily place a "SOLD" sticker on their "FOR SALE" signs whenever they secure a sales agreement signed by both purchaser and seller. But is the property really "SOLD?"

In a 1978 decision the Georgia Court of Appeals defined the word "SOLD" as it applies to real property transactions. The court held; "The word 'sold' imports not a mere proposition to sell, but a consummated contract of sale." and "Ordinarily a sale is an executed contract—a completed transaction binding on seller and buyer alike."

A sales agreement signed by the purchaser and the seller is an executory contract, not an executed contract. An executory contract becomes an executed contract when the buyer and the seller have performed all of the obligations to which they agreed upon signing the sales agreement.

Therefore, when the buyer and seller sign a sales agreement, the property is not "SOLD." The property is "SOLD" when the transaction closes and the parties fulfill all of their obligations in the sales agreement (such as paying the purchase price and delivery of a deed).

In light of this court decision, a licensee should not place a "SOLD" sign on a property before a closing. Such an action may violate the provision of the real estate license law prohibiting licensees from "pursuing a course of misrepresentation . . . through advertising."

Placing a "SOLD" sign on a property on which the parties have not fully executed the provisions of the sales agreement is misleading and inaccurate. Licensees who wish to indicate on a sign that a sales agreement has been signed on a particular property should consider using language such as "under contract," "contract pending," or "sale pending."

—Georgia Newsletter—July, 1986