Editor’s Note: This article was updated with some technical wording changes in the third and fourth answers.
There’s been a recent uptick in PAR Legal Hotline calls about deadlines and the counting of days. We’re not sure why, exactly, but since it hits a few of the core provisions of key standard forms, they’re probably worth reviewing here.
Q: The Agreement of Sale was fully executed by the parties on Monday, and the buyer has five days to make their deposit. Do we start counting from Monday (the execution date) or Tuesday (the day after)?
This is clearly covered in the dates/time is of the essence paragraph of each Agreement of Sale (paragraph 5(C) of Form ASR and the equivalent paragraphs in the other agreements): “For purposes of this agreement, the number of days will be counted from the execution date, excluding the day this agreement was executed and including the last day of the time period.”
So… you find the execution date (Monday), start counting the next day (Tuesday) and continue counting to the fifth day (Tuesday, Wednesday, Thursday, Friday, Saturday). Since the last day of the time period is included, the buyer’s deposit is due on or before Saturday.
Q: If a deadline falls on a weekend or holiday, is it pushed off to the next business day?
A: No. See above. The days in PAR standard forms are calendar days, not “business days.”
And please do not write in “business days,” as that often creates more problems than it solves. Agents and parties may have… let’s call it “flexible…” ideas of what makes a business day depending on whether they’re trying to lengthen or shorten a time period for the other party, which can lead to more uncertainty and conflict. Agents should take a look at the calendar as you’re closing in on an execution date and if it looks like deadlines might be a problem, it’s better to just change the number of days for certain provisions instead of trying to change how the days are counted.
Q: The buyer submitted a written corrective proposal on day six of the 10-day contingency period in the inspection contingency. Does the negotiation period start on day seven (the day after getting the proposal) or day 11 (the day after the end of the contingency period)?
A: Day 11.
The current language states that the buyer can provide a written corrective proposal during the defined Contingency Period, but that “following the end of the Contingency Period” there is a five-day “Negotiation Period,” and that if there is still not a satisfactory resolution then “following the end of the Negotiation Period” the buyer has an additional two-day period to decide if they want to terminate the contract. In short, each successive time period is triggered only by the expiration of the prior time period. It is true that the treatment of this issue has changed over time. Prior agreements had a timeline triggered by the written corrective proposal, but the current structure has been in place since 2010.
Q: My buyer submitted a written corrective proposal. We’re now in the negotiation period and there has been no resolution to their request. Can the buyers just terminate now or do they have to wait until after the entire negotiation period has run?
A: They have to wait and could not terminate until the Negotiation Period expires with no resolution (i.e., the seller doesn’t break down and agree to the entire proposal or the parties can’t reach a mutually acceptable written agreement).
The words of the agreements say that a buyer can terminate during the Contingency Period if they get a report with some unsatisfactory result or they can submit a written corrective proposal. But once the proposal is submitted, the buyer has agreed to follow the procedures laid out in the forms, which means that the parties have a defined negotiation period to…negotiate.
The negotiation period is designed to give both parties the ability to take a breath and negotiate a resolution without the fear that a buyer might be able to just change their mind and walk away at any moment. Many Realtors® have been in transactions where sellers ABSOLUTELY REFUSE to make certain concessions when presented with a list of requests, but after thinking about it for a few days they come back to the negotiating table. Of course, if it’s clear that there is just no room to compromise the parties can always voluntarily agree to mutually terminate the contract earlier, but the key is that both parties are agreeing to shut things down – the buyer can’t do it on their own.