The dates and deadlines can be bewildering.
By Deborah Rutter
I am not an attorney (and don’t even play one on TV), and this isn’t a lesson in contract law by any stretch. But as a buyer or seller, sooner or later, you’ll have a contract to either buy or sell in front of you.
Most states have standard-form contracts that most (not all) agents use. Some states have attorneys draft real estate contracts, but for the most part, standard-issue real estate purchase contracts are the norm for central Virginia. Real estate agents are familiar with them because they use them all the time, so they understand what is required, what is usual and customary, and have expertise in understanding the language versus the actual application.
But what about you, the careful contract reader? The dates and deadlines can be bewildering. While your buyer or seller agent should be looking out for your interests and watching the dates, making sure you and other parties comply, this is no time to relinquish responsibility. You’ll notice the agent’s name is not on the contract…contracts are between buyers and sellers, so you need to understand what you’re signing. That means reading it carefully and asking lots of questions.
Let’s look at some specific issues around dates:
CONTRACT DATE: This is usually the date that the first party, the buyer, signs. It’s the date that pen is put to paper, and the buyer confirms that everything in the contract represents their interests, position, and desires.
EXECUTION DATE: In different places, it’s sometime called the ratification date or the “under contract” date, etc. It’s the date, when, after each side has gone back and forth, negotiating, strategizing, and changing terms…everyone agrees on everything. Sometime it can be hours after the contract date, or it may be weeks, depending on negotiations, one party not being available, etc. Some contracts have a special place on the contract to write this “second” date, other contracts don’t, so be sure that you understand which date the remaining dates will start from.
CALENDAR DAYS vs BUSINESS DAYS: Most contracts will spell out which date parameters are being used. This is critical. A clause that says, “three days,” could mean five days to do something if it’s Friday and BUSINESS days are being used, for example, since you could use the weekend as a non-counted time-frame. And be sure that each date using the same kind of counting…some contracts might use calendar days for one section, but business days for another.
HOLIDAYS: Holidays vary from state to state. There are Federal holidays observed by most states, bank holidays, holidays only observed in one state or a few states…if you’re involved with a contract that is NOT in your home-state, don’t get lulled into thinking you know what “holidays” mean…in Maine and Massachusetts, Patriots Day is celebrated…but no where else, for example. In Virginia, Lee Jackson Day is observed. Be sure you know what holidays are observed, and when.
Most contracts specify “X number of days from the execution date” to get things done. Things like inspections, making a loan application, negotiating additional concerns around inspection findings, etc. There are also additional dates from those dates that may indicate grace periods, or additional time allowed. It can be very confusing. Your listing or buyer agent can help you with the calendar and understanding what is required of you, and when.
Using a paper calendar can be helpful to see all your requirements at a quick glance. Be sure to give yourself a few days in advance of your deadline to get your arrangements ready. Vacations, missed calls, lost emails and a host of other issues can eat away at deadlines. Do everything you can, as soon as you can, so you have some grace period in case things go sideways.
When buyers want to buy and sellers want to sell, sometimes deadlines are ignored. This is not always the case, however, and missed deadlines are a breach of contract, so there should be no expectation of understanding by the other party if a deadline is passed. Sellers who know another offer is available may be waiting for a buyer to slip up, and likewise, a buyer who spies a more suitable property may use deadlines to exit a contract. Both those scenarios create risk for both parties, so make sure that the offer in front of you is one you want to attempt to execute fully. Most contracts now are written in readable English and can be followed with careful reading and a good calendar.
Residential contract dates aren’t meant to be confusing, but they can be. Read the contract, mark your calendar and constantly follow-up to be sure you’re on track! Be sure you, your agent and the other parties to your transaction (mortgage folks, inspectors, title companies, etc), understand when their responsibilities come into play, and you should be able to hit your closing date with minimal drama.
Deborah Rutter is an Associate Broker at Nest Realty with passion for teaching. She knows buyers and sellers make the smartest decisions for themselves when they are armed with data and insight. She has taught first-time homebuyer education classes, and is a featured contributor on our blog. Check back for insights and advice or contact Deborah directly to discuss your buying or selling needs.