Time IS of the Essence
Our real estate contract is very long, indeed. With 11 “front” pages, plus 8 “back” pages, that is a lot of information for a real estate consumer to digest. Buyers and sellers alike tend to focus on price, price, price and often neglect some of the document’s most important terms. In our state, the Agreement of Sale declares “time is of the essence” inside the Agreement. This is a legal term of art and yet all of the non-lawyers are expected to understand what it means. To the real estate consumer, it means that the days mean what they say they mean – you get no extra time (without a signed addendum, that is) to meet you deadlines. And so it is absolutely critical for every party to a real estate contract sit down with their contract and their realtor and write these critical dates on their calendar. Gone are the days of a handshake forming the basis of a real estate transaction. It is all very legal now and if you are not watching your deadlines, you very well could live to regret it.
So what harm may come, you may wonder, by missing a deadline by a day or two? If you are a buyer and you fail to respond to your home inspection on time, you are taking the house as is. This could mean absorbing a lot of inspection deficiencies. Your only option if you miss this deadline? Default on the contract and lose your hand money – it might be cheaper than absorbing a lot of inspection deficiencies. Better yet – don’t miss the deadline!
If you are a buyer and the lender you choose fails to provide the seller with a compliant mortgage commitment on time, the seller has the right to terminate your transaction – this little slip-up could cost you your dream home. Choose your lender wisely and make sure you impress upon them the importance of meeting this deadline – if they seem too busy with refinances, consider shopping for a lender who can guarantee that they will meet the deadline.
If you are a buyer or seller and you don’t make the closing date, you could be paying damages to the other party for the expenses they incur for your failure to close on time.
There are no automatic extensions or free days in PA – you need to know and abide by your deadlines or be prepared for the possibility of some unpleasant consequences. Before you sign a contract, make sure you check your calendar and that you can focus your undivided attention to meeting these deadlines and making your real estate transaction a success.