26, 2007), the Appellate Division considered, but declined to uphold, a trial judge’s decision that a time of the essence requirement could be inferred from the seller’s testimony that the purchaser understood that the seller was agreeing to a certain price because of an urgent financial need to close. ![]() While any intent to make time of the essence at the time of contract formation should be expressly stated in the real estate contract, contracting parties should also be aware that, while not common, a court could conclude, based on extrinsic evidence, that the parties intended the projected closing date be time of the essence. ![]() Generally, for a stated closing date to be considered an essential component of a real estate contract, the real estate contract must clearly establish that the parties understood at the time that a failure to perform on such date, and in some cases even at a particular hour on such date, would result in the failing party’s forfeiture of all rights to enforce its rights under the real estate contract. Simply specifying a particular closing date in a contract generally will not make time of the essence, as this date is generally considered a formality rather than a requirement. If the time of performance is material to the real estate contract, then the real estate contract or subsequent amendments thereto should expressly state this understanding. Parties to a real estate contract are obligated to perform their duties within a reasonable period of time following execution of the contract unless otherwise agreed. ![]() 2, 2007), the party that first asserts a time of the essence closing date can be held in default of the real estate contract when the assertion is invalid and such party subsequently refuses to complete the real estate transaction. Unfortunately, as shown in a recent unpublished case,įarnella v. The party delivering such notice, however, must ensure that the notice itself is sufficiently specific to enable the recipient to comply, that the sender can perform on the date set for closing, that there are no open issues to be resolved between the date of the notice and the date set for closing, that the sender has not prevented the recipient from being able to perform on the date set for closing, and that, after delivering the notice, the sender does not waive its rights established thereunder by continuing to negotiate an alternative closing date. It is widely recognized, where time is not originally made of the essence in a real estate contact, that the time period between delivery of a time of the essence notice and the date set for closing must be reasonable in relation to circumstances leading up to delivery of the time of the essence notice. Parties must take care to avoid having a time of the essence notice backfire. ![]() There are general guidelines to consider when determining whether to assert � either at the time of contract formation or following the parties’ failure to close on the projected date � that timing is an essential component of a real estate contract. It is a doctrine that has evolved over time without a concrete set of rules. Making the date specified for a real estate closing “of the essence” is a time honored tool.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |