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Time is of the Essence

Q. I have just been through the worst experience of my life. I truly had the buyer from hell! The transaction was going so smoothly until the very end when he just would not get his money to escrow and close at the appointed date for, it appeared to me and everyone else involved, no specific reason. I gave him two extensions because I had already made plans to move and needed the money to do so. The escrow finally closed but the nerve-wracking effects are still lingering. My son is planning on selling his home some time this year and I want to help him prevent the problem that I had with my sale. What do you suggest?

A. First of all, it’s important to remember that time is of the essence. There are time specifications for each step of the transaction and they should be adhered to in order to comply with the purchase agreement and escrow instructions.

There are several forms that a real estate agent will provide to help accomplish keeping the process on track.

Contingency Removal – A buyer’s sole responsibility is the physical inspection, appraisal and loan contingencies. A seller is responsible for providing all reports and disclosures contingent on the buyer’s approval. A buyer may make an offer contingent on a property to be sold and a seller may accept an offer contingent on a property to be purchased. All the contingences need to be removed within the time specified in the purchase agreement. The transaction will then proceed.

Notice to Perform – In addition to removing the above contingencies, a buyer must perform in a timely manner regarding contractual actions. These would include getting the earnest money deposit to escrow, providing a loan application letter, verifying down payment funds and returning signed disclosures. A seller must also perform in a timely manner in providing reports and disclosures to the buyer. The seller may cancel the agreement if the buyer doesn’t perform. The buyer may cancel the agreement or delay removing an applicable contingency if the seller doesn’t perform.

Demand to Close Escrow – This is a form that would have been used in your situation. You fulfilled all your obligations and the buyer removed all his contingencies. All that needed to happen was to have the money given to escrow, loan docs signed, funding and finally the recording of the deed. That’s the part that didn’t happen when specified. This form gives the seller the right to cancel the agreement, bring legal action for damages (including but not limited to the deposit) or force the purchase of the property (specific performance). On the other hand, buyers have rights, too. If the seller does not close escrow by the specified and the buyer fully performed, the buyer may bring legal action for damages due to breach of contract or force the sale of the property (again specific performance) or both.

Again, time is of the essence. These forms are only the instruments. The parties must follow through.