What
you need to know about “the Time is of the essence:” clause in the Florida
Real Estate contract?
It’s
a common scenario, particularly in the current sellers market. You, the buyers are not
fully aware of the importance of the phrase “Time is of the essence” and you do
not get your second deposit to the agent of the Title Company in time.
The
seller has two other buyers lined up to buy the home – maybe even one who’s
willing to pay a little more than you. The contract falls through and you are back to
square one. How do you avoid this problem?
Make
sure you fully understand that almost every Florida Real Estate contract has a clause
called “Time is of the essence”. In plain English this means that every action
required by either the buyer or the seller has a date attached to it. If either party
fails to comply with the date of the required action, the other party can call the
contract null and void.
In
addition, if you as the buyer fail to perform, the seller may be able to keep your deposit
as liquidated damages. The best case scenario is that you end up with a dispute over the
deposit which could take twelve months or more to settle.
To
make sure you do not lose out on the home of your dreams pay particular attention to the
five most important points where “Time is of the essence” can come back to bite
you.
Deposits.
In
a typical contract the buyer will give a smallish deposit with the initial offer, with a
second deposit due within a specific number of days. If you fail to get this second
deposit to the appropriate party (Realtor®, Title Co. Escrow agent etc) by the due date
the seller could declare you in default and sell the property to another buyer, in
addition to possibly keeping your initial deposit.
Time
to accept the offer.
If
the contract is going back and forth between seller and buyer while price negotiation is
taking place both parties need to pay particular attention to the clause “Time for
acceptance”. If either party fails to meet these time scales the offer or counter
offer could be withdrawn.
Mortgage/Financing
contingency.
If
the contract is subject to mortgage financing be sure that both application and approval
dates are realistic and adhered too. In a rising market the seller just might use this
condition to drop the buyer and seek a higher price elsewhere.
Who
is responsible for Title Insurance?
If
the seller is responsible for providing a title insurance commitment by a certain date and
fails to deliver the buyer may well use this as a way out of the contract and claim
default by the seller resulting in a return of the deposit.
Property
Inspections.
Please
remember, as a buyer you typically have a very limited time frame to have your home
inspection carried out. This really is where the phrase “If you snooze you
loose” makes perfect sense because if you do not complete these inspections within
the given time frame you probably have lost that right and will not be able to claim any
compensation for repairs or even worse you may be stuck buying a home that requires costly
repairs you were unaware of.
Remember.
Dates
contained within a contract are just that “A Contract” you will not be able to
change them without the other parties consent. Don’t think that this will always be
given. Buyers and sellers may have opposing agenda. Always be sure that you can comply
with each date contained within your contract.
|
