Time is of the Essence

You often see the phrase “time is of the essence” in contracts.  You’ll find it in my standard office to purchase form and most realtor forms.  It means that whenever there is a deadline for something to be done, everyone will be held strictly to those dates and times.  This is especially important for you to remember if you are buying or selling a home without a realtor as no one will be monitoring deadlines for you.  For example, if your offer to purchase states that the buyer must have approval of financing  by a certain date, it is not sufficient if the financing is approved early the following morning.  Similarly, if a buyer or seller does not tender the money (buyer) or transfer (seller) on the possession day, they are in breach of the contract and could possibly lose their deal.  There are some exceptions to the “time is of the essence” rule, though.  For example, there are cases saying if you do something to let the other party believe that you won’t be strictly holding them to the date to meet their conditions or if you appear to be giving them additional time to come up with their money or transfer on closing, then you have taken “time is of the essence” off the table.  In short, one side’s actions may lead the other party to reasonably believe they aren’t going to be held to those timelines.  The key is whether the belief was reasonable based on the other side’s actions.  If so, the court might not say they have lost their bargain over that.  If time is no longer of the essence, you need to put the deadlines back into play again.  You will need to make it clear to the other side that time is again of the essence and that you will hold them to their deadlines.  If the deadline had already gone by or is about to expire, you may need to be reasonable about the new deadline you impose.  What is reasonable depends on all the surrounding circumstances.  It is best to give this to the other party in writing to ensure there is no misunderstanding.

Naturally, if you are in this situation, it can leave you feeling anxious and uncertain about whether you have a deal or not.  The best policy is to never let a deadline go by unless you have a written extension signed by the other side.  Make a checklist and diarize your deadlines.  If you are the seller, don’t lull the buyer into believing that the date to meet their financing and other conditions is only a technicality.  It may only encourage the other side to not take things seriously, leading to undertainty and possibly disappointment for everyone.