While a seller faced with such delay can attempt to force a closing by sending the buyer a “time is of the essence” letter, it is very likely the closing will be delayed…that is, if the deal can be salvaged and stay on-track. Furthermore, upon receiving the letter, if the buyer does not immediately consent to close in accordance with the original terms – or any new terms set forth – the seller can expect to incur additional legal expenses and ultimately may find themselves in litigation.
In order to avoid this conflict and adhere to the closing parameters agreed-to by the purchaser and seller at the time the deal was struck, we believe it best to include provisions in all Contracts of Sale specifying timelines by which financing can be secured, including those cases where an “all cash” deal has been offered. These timelines cover date-certain issues such as the buyer’s deadline for any finance application submissions, the actual closing date itself, and the last date for a seller to cancel the contract (and attendant penalties for the buyer’s non-compliance). These considerations are included to help ensure that a closing actually occurs at the time contemplated when the deal was negotiated. In the end, while it may appear these provisions are included to protect only the seller, they, in fact, protect both parties and greatly reduce the likelihood of litigation.
The authors maintain separate practices and collaborate from time-to-time representing sellers and homebuyers in real estate transactions. You may contact Barbara Albom at firstname.lastname@example.org and Nicholas Ferrar at email@example.com