You don’t need to be reminded how time-sensitive the business of real estate can be.
Timing is not always everything, but it is critical in the executory period that exists between signing an agreement and settlement. A good practitioner should never lose sight of the timing of events, the periods within which tasks must be completed and even the timing of settlement.
Recently I received a last-minute request to accompany a seller to her closing. The closing took place on a Friday afternoon at 4 p.m., as an accommodation to the buyer. When the title agent reviewed the amount required to pay off her mortgage, the seller was surprised that it didn’t compare to what was shown on her amortization schedule as the balance due. Some of the discrepancy could be attributed to interest that had accrued since her last payment, but approximately $75 was attributed to the fact that the payoff would not occur until the following Monday. Even though the funds to satisfy the mortgage would be wired that Friday afternoon, they would not be credited until the mortgage company’s opening on Monday. Most of the time, this would not be noticed by a seller, but it was hard to argue with my seller’s position that it was her $75 interest and her $25 wire fee. She wanted to know who scheduled the settlement and why she was not told of the additional interest she had to pay because of the hour of the day that closing took place. Her ire eventually focused on her listing agent who, she claimed, should have told her about the additional amounts to which she would be subject if settlement occurred later in the afternoon. What is your thought, do you have a duty to discuss this with your seller?
Most of the problems involving timing have to do with inspection contingencies and other temporal obligations imposed by the agreement. Everyone in the business knows of horror stories arising from a missed date or even a missed hour. Unfortunately, these horror stories recur with more frequency than any other problem.
When it comes to counting days, there are plenty of myths out there. If a deadline falls on a Saturday, Sunday or holiday, the period for performance is automatically extended until the next business day. Wrong. And there seems to be no consensus whether a day is limited to 24 hours or whether it extends to midnight of the last day of the period.
Lawyers catch a break. We have rules of civil procedure that include a rule entitled “computation of time.” It provides that when the last day falls on a Saturday or Sunday or any legal holiday as defined by state or federal law, the day is omitted from the time computation. Real estate licensees have no such rule. So a day is… a day.
As for the day consisting of 24 hours or extending to midnight, that is covered by the Agreement of Sale (Form ASR), which just happens to borrow language from the Pennsylvania Rules of Civil Procedure stating that the computation of time includes “ …the last day of the time period.” So, if the last day is Tuesday, you get all of Tuesday, right up to midnight.
Given the relative importance of time to a real estate transaction, you’d think that agents would be at the top of their game so that their clients never miss a deadline. My experience representing licensees suggests that that is not the case. Fortunately, most parties focus on getting the deal done and that they overlook breaches, higher mortgage payoffs and the like. But if you are going to rely on the reasonableness of buyers and sellers, you are playing a game of Russian roulette. One day you are going to have a seller who demands that you pay the additional $75 interest because you set a 4 p.m. Friday settlement without explaining the additional interest the seller would be charged.