Time is of The Essence. T.O.E. In your contracts, has time ever been not of the essence…for any contingency? Attorney at Von Briesen and Roper, S.C. published an article last January pondering the question …But Should it Be?
Whether or not time should be of the essence apparently is not always considered appropriate and reasonable for deciding a missed deadline is automatically a material breach of the contract. Attorneys Jenny, West, and Siehr discuss this question from the perspective of how a court might decide a case where one party claims injury as a result of a breach by the other party. That’s a bigger issue than we’re qualified to comment on, but there is an area where understanding the clause in the contract will give our clients an opportunity to enhance their offer for their benefit. I’m thinking of buyer-clients.
In a Seller driven market, modifications to the advantage of the Buyer, if identified by the other side could be detrimental to the appeal of the Offer in the mind of the seller. But, where a buyer has the advantage, a Time is of the Essence exception might be the last little safety the client needs to complete their due diligence without deadlines lapsing. An inspection contingency, appraisal, an approval by government agency, lab test results, financing commitment letter are all contingencies which a Buyer might exclude from the T.O.E. Where there is a chance the deadline might be a bit too short, an exception to T.O.E. for that condition could keep the buyer safe from a Notice of Breach for being a day or two late on satisfying the contingency. (Again, that’s a bigger issue than we can address, but you get the point. It’s an option a buyer could negotiate.)
For a person to know if having an exclusion to T.O.E. is worth including is a question for a person’s attorney. Here’s the contingency as it appears in the Residential Offer to Purchase. Maybe make an appointment to talk to your real estate attorney to get her opinion on the implications of the choices for your client. (If you’re the listing agent and you get an offer with exceptions to T.O.E. be sure to bring them to the attention of your client, so they can get legal advice.