Tick Tock. Time is Up! “Time is of the Essence.”

Posted on: May 8th, 2013
Real estate contracts are filled with boilerplate provisions. Examples of boilerplate provisions include the prevailing party attorney fee language or the lead paint disclosure provision. Each of these boilerplate provisions contains important legal rights or obligations that should be carefully studied to ensure that such provisions are applicable and appropriate to the real estate transaction being contemplated by the parties.
A critical boilerplate provision is a 5 word sentence that is contained in many contracts, including real estate and business contracts, which simply provides that “Time is of the Essence.” This sentence means that the parties have agreed that all deadlines in the contract are to be strictly complied with or the party that fails to meet contractual deadline could be in breach of the contract. “Time is of the essence” can be waived or forfeited by a party, if a clear written objection was not made by the party seeking to enforce the provision to put the breaching party on notice.

“Time is of the essence” is an important clause in a contract if the parties seek to strictly abide by the deadlines in the contract. Please keep in mind that other provisions in the contract can make it cumbersome to figure out a specific deadline. For example, many contracts provide the deadlines in the number of days (i.e., closing shall be 30 days from the effective date). To determine the date of the deadline, the time provision should be reviewed in the contract in order to determine whether the days are calculated in calendar or business days. A misreading of the time provision in the contract can have disastrous consequences if a time is of the essence provision is enforced in the contract.

Given the consequences of missing deadlines in a contract, I follow two procedures for the buyer or seller I am representing. First, I calculate the deadlines and circulate them to the other party and have a written record (email is enough) of the agreement to the contractual deadlines. Second, if the other party violates a deadline in the contract, I make a clear written objection and deliver it as is required by the notice provision in the contract.

Some may assume, at their peril, that boilerplate provisions in a contract have no meaningful impact on the contract. Bartley Law has years of experience in reviewing, drafting and negotiating real estate contracts, including boilerplate provisions that can trip up even the most sophisticated of buyers and/or sellers. Please contact us if we can be of assistance to you in this area.
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