"Time is of the Essence"
December 19, 2012
A phrase that is on the California Association of Realtors' Purchase Agreement and in many of their other contracts is "Time is of the Essence". In the context of contract law, this phrase means that any and all time frames in a purchase agreement are important. If the agreement calls for the buyer to submit proof of funds for the down payment and closing costs within seven days from date of acceptance, this is a deadline. Failure to meet the deadline may be considered a breach of the contract. In any of the C.A.R. Purchase Agreements there are time frames for performance by both the buyer and the seller.
In the day to day world of real estate transactions, it does occur that either the buyer or the seller may not perform within the specified time.When this happens, the other side of the transaction has the right to seek performance. C.A.R. has developed a form that can be used. This form is called "Notice to perform". It allows for the non performing party to have two days to perform. If no performance the contract may be cancelled.
Sometimes the failure to meet the deadline is not the fault of the buyer if, for instance, the lender fails to get the appraiser out in a timely manner.While this could be the reason for the missed deadline, it does not change the contractual agreement to meet a certain date. Sometimes a seller in a homeowners' asociation cannot deliver the homeowner documents within the specified time frames. Again, it may not be the sellers fault, but the buyer could send a "Notice to Perform" with the two day time for the seller to perform.
During the past several years when the real estate market was slow, agents and principals became a little lax at enforcing the time frames. With multiple buyers, sellers and their agents may become more diligent in keeping the transaction on the timely track.
"Time is of the Essence" is not to be taken lightly.
A phrase that is on the California Association of Realtors' Purchase Agreement and in many of their other contracts is "Time is of the Essence". In the context of contract law, this phrase means that any and all time frames in a purchase agreement are important. If the agreement calls for the buyer to submit proof of funds for the down payment and closing costs within seven days from date of acceptance, this is a deadline. Failure to meet the deadline may be considered a breach of the contract. In any of the C.A.R. Purchase Agreements there are time frames for performance by both the buyer and the seller.
In the day to day world of real estate transactions, it does occur that either the buyer or the seller may not perform within the specified time.When this happens, the other side of the transaction has the right to seek performance. C.A.R. has developed a form that can be used. This form is called "Notice to perform". It allows for the non performing party to have two days to perform. If no performance the contract may be cancelled.
Sometimes the failure to meet the deadline is not the fault of the buyer if, for instance, the lender fails to get the appraiser out in a timely manner.While this could be the reason for the missed deadline, it does not change the contractual agreement to meet a certain date. Sometimes a seller in a homeowners' asociation cannot deliver the homeowner documents within the specified time frames. Again, it may not be the sellers fault, but the buyer could send a "Notice to Perform" with the two day time for the seller to perform.
During the past several years when the real estate market was slow, agents and principals became a little lax at enforcing the time frames. With multiple buyers, sellers and their agents may become more diligent in keeping the transaction on the timely track.
"Time is of the Essence" is not to be taken lightly.
posted by shirley harry at 6:00 PM
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