If you’re involved in a home purchase, then you might find yourself coming across with a “time is of the essence” provision. You might have heard of this term before but weren’t sure what to make of it. What exactly, is time of the essence and why is it important in your New York real estate contract?
Definition of Time of the Essence
The term “time of the essence” is a legal term of art that is used to state the timeline in which one party must complete their contractual duties. Completing the time is not only a priority but also a necessary part of the completion. If they fail to meet the deadlines agreed to with regard to “time of the essence,” it is considered a breach of the contract.
Time of the Essence Letters
While this provision can be used in various types of contracts, it is very common in real estate transactions. In this context, it is sometimes applied in a time of the essence letter, instead of explicitly stated in the contract.
For the court to view the time of the essence letter as valid, it should include the following:
- A reasonable timeline
- Clear conditions
- Information about the consequences if the party doesn’t meet the stated timeline
What Types of Acts Can Be Subject to “Time of the Essence” Deadlines?
Basically, anything that should be completed within a given amount of time in a real estate transaction is ripe for a “time of the essence” provision. For example, this can include notices, document delivery, termination procedures, and the closing date of the transaction. A real estate agreement should include specific completion dates for the tasks that have time contingencies.
What Happens if Time of the Essence Deadlines are Not Met?
If there is a “time is of the essence” clause in the contract, there are consequences for the failure to meet the timeline. For instance, suppose the contract requires you to provide an inspection report in 5 days. If you don’t provide the report to the other party within the 5 days, you would be subject to the consequences, such as facing potential termination of the contract.
Time is of the Essence Principles
While the details will differ for each contract, there are certain conditions that should be present:
- All parties must be aware of its existence: If any party is unaware of their obligations, then it will not be enforceable; everyone involved in the transaction needs to know the deadlines and the consequences of missing them.
- All parties may request a reasonable postponement of closing day: The parties are entitled to ask to postpone the closing day. However, it must be reasonable, and the other party must agree.
- Amendments are available: If someone breaches, it is still possible to remedy by amending the original clause. If both parties don’t agree to amend the breached provision, the missed time frame can end with major consequences.
Let an Attorney Help with Your “Time is of the Essence” Real Estate Transactions
The purpose of a “time of the essence” clause is to maintain accountability during the real estate transaction. If you want to include this in your agreement, you can work with an experienced MOWK Law real estate attorney. When the deadlines and consequences are determined, both buyer and seller can advance to a satisfying closing day. Contact us today to get started.