Residential Contract for Sale and Purchase

Whether you are using the Residential Contract for Sale and Purchase (Florida Realtors/Florida Bar-4x) or the “As Is” Residential Contract for Sale and Purchase (Florida Realtors/Florida Bar-AsIs-4x), time is calculated the same under both forms. Also, time is of the essence in both contracts so it is important not to miss a contract deadline.

Under both contract forms, Standard 18F for calculating time reads as follows:

“TIME: Calendar days shall be used in computing time periods. Time is of the essence in this Contract. Other than time for acceptance and Effective Date as set forth in Paragraph 3, any time periods provided for or dates specified in this Contract, whether preprinted, handwritten, typewritten or inserted herein, which shall end or occur on a Saturday, Sunday, or a national legal holiday (see U.S.C. 6103) shall extend to 5:00 p.m. (where the Property is located) of the next business day.”

Since most time deadlines are tied to the Effective Date of the Contract, you need to make certain the Effective Date of the Contract. Under Paragraph 3(b) of both contracts, Effective Date is defined as follows: “The effective date of this Contract shall be the date when the last one of the Buyer and Seller has signed or initialed and delivered this offer or final counter-offer.”

Now for purposes of this blog let’s assume the following deadlines:

Effective Date is June 15, 2016;

Initial Deposit is due 3 days after the Effective Date;

Closing Date is August 1, 2016;

Paragraph 8b is checked;

Inspection Period under Paragraph 12 is10 days after Effective Date; and

Title Evidence Deadline under Paragraph 9 is 15 days prior to Closing Date.

When counting days you don’t count the starting date as day 1, start with the next day. For example, calculating the Initial Deposit June 16, 2016 would be day 1 making June 18th the third day after the Effective Date which happens to fall on a Saturday. As provided above, any time periods ending on a Saturday shall extend to 5:00 p.m. of the next business day. Therefore, the Initial Deposit would be due by 5:00 p.m. on June 20, 2016. Now that the Deposit has been paid, let’s figure out when the Inspection Period expires.

The Inspection Period under Paragraph 12 was filled in with 10 days after Effective Date which happens to fall on June 25, 2016. Since it falls on a Saturday, it would extend to the next business day which would be June 27, 2016. Let’s assume it is the “As Is” Contract and your buyer wants to terminate the Contract. Do you need to give notice by 5:00 p.m. on June 27th or 11:59 p.m.? It would be 5:00 p.m. since it was extended to the next business day. However, if your Inspection Period fell on June 24, 2016, you would have until 11:59 p.m. to give notice since it is a “calendar” day.

Let’s pretend that the buyer was elated with the inspection results and is proceeding with closing and needs to make sure they will get marketable title. Under Paragraph 9(c), the Title Evidence Deadline was left blank which means the title commitment is due at least 15 days prior to Closing Date. Closing Date is August 1st so we start with day 1 which is Sunday, July 31st and count backwards. Day 15 falls on July 17, 2016 which happens to be a Sunday. No problem, we proceed to the next business day which is Monday, July 18, 2016. You would be incorrect if you calculated Monday, July 18th as the Title Evidence Deadline. Remember the language reads at least 15 days prior to Closing Date. Therefore, you need at least 15 days prior to Closing Date so you would extend it to 5:00 p.m. on Friday, July 15, 2016.

Although, we all know buyers want to close on the first, fifteenth, or the last day of the month, so what if the Closing Date was July 31, 2016? Do we close on August 1st or July 29th? The Closing Date would extend until August 1, 2016. What if you mistakenly used on or before July 31, 2016 for the Closing Date? Not really clear in that situation but the Closing Date probably would not extend to August 1, 2016 and you would need to close by July 29, 2016. Using “on or before” with the Closing Date still requires both parties to agree to close early. You want to avoid creating a false impression with your buyer that the buyer can require the seller to close early by using on or before in the contract.

Calculating proper contract deadlines is extremely important and can be somewhat confusing. Don’t let father time sneak up on your transaction this Father’s Day! As always, if you have any questions determining dates under either contract, we urge you to consult with your real estate attorney.

Sincerely,

Berlin Patten Ebling, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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