What is “Time of the Essence” and what can it mean to my real estate contract? Time of the essence means that the performance by one party to the contract at a specified location, date and time is required in order to require performance by the other party to the contract, and a failure to perform by the time specified will be a breach of the contract.
Why should I make time of the essence part of the transaction? Generally, the date set forth in a contract for closing of title is an estimated date and may often be delayed by either party without penalty. When closing on a particular date is of the utmost importance to one or both parties, a time of the essence provision in the contract may be the only way to insure a closing on that date. A “flexible” closing date can work to the advantage of either or both parties, so while including a time of the essence provision in a real estate contract may be advantageous, doing it automatically can also backfire. In most instances, time of the essence is invoked by one party after the date set for closing in the contract has come and gone in order to “push” the other side to close.
After the Contract
How do I make time of the essence? Time of the essence can be incorporated by the parties in the contract itself. If not in the contract itself, time of the essence may be invoked by a party to a contract by written notice to the other party, specifying that at a particular date, time and place that party will be ready, willing and able to close and that a failure to close at the stated date, time and place will be a breach of the contract. The amount of time given in the notice must be reasonable under the circumstances. Generally, at least 10 days notice is required. A typical time of the essence clause might read as follows:
PLEASE TAKE NOTICE that the Seller will be ready, willing and able to deliver title and possession in accordance with the aforementioned Contract of Sale on Thursday, March 8, 2001 at 11:00 A.M., at your office, which TIME is hereby made OF THE ESSENCE of the Contract.
If you fail to appear to deliver the balance of the sales price at the aforementioned time and place in accordance with the terms of the Contract, you will deemed to be in breach of the Contract, you will lose your rights under the Contract, you will forfeit the entire deposit, and you will be held responsible for all further losses and damages which the Seller may sustain or incur as a result of your failure to consummate the Contract.