After some intense negotiations and finally getting closer to owning your dream home, what’ll happen if you can’t make it to the finish line? We invited Shearon Ramnarine-Jokhai, a trusted real estate attorney at Pun and Associates, who’ll explain what power a closing date holds, and how that will affect your home-buying journey.
The good news is the closing date on the real estate contract is usually “on or about.” It is an estimated date mutually agreed upon by the buyer and seller. So, not closing on time doesn’t automatically result in a breach of contract. The buyer and seller can renegotiate a new closing date that works for both parties.
However, if the phrase “time is of the essence” is present in the contract, then it means the specified closing date is a hard deadline. When either party fails to perform its obligations, that party breaches the contract. Wilson advised it’s best to avoid this clause because happy little accidents happen.
For example, after the seller has accepted a buyer’s offer and the buyer deposits in escrow, the buyer may risk losing that deposit as liquidated damages to the seller if the deal eventually falls apart. The reason for this is the closing date is not met on time.
To conclude, communicating with your buyer or seller when problems arise will save both parties from many troubles.