“Dating” is an important concept that carries different implications, reactions and consequences. The idea of dating will trigger memories (perhaps traumatic) of our early teen years! While talking about dating — or any other salacious topic — may truly capture our attention, dating has a far more integral — and important — meaning for Realtors®. The Real Estate Licensing and Registration Act (RELRA) and the State Real Estate Commission Rules and Regulations govern many aspects how licensees are to conduct themselves in transactions, and defining the essential elements of an agreement of sale is no exception.
The Rules and Regulations instruct licensees that an agreement must include: (1) the date of the agreement; (2) the names of the buyer and seller; (3) a description of the property and the interest to be conveyed; (4) the sale price; and (5) the dates for payment and conveyance. The consequences for failing to satisfy these licensing obligations are frequently misunderstood. Failing to include the date on an agreement of sale may constitute a licensing violation; its absence does not mean the agreement is unenforceable. An enforceable contract is formed when the parties reach a mutual understanding, exchange consideration and identify the terms of the agreement with sufficient clarity. Failing to date the agreement of sale is not fatal to its enforceability.
Is dating really an issue when using the PAR Standard Agreement for the Sale of Real Estate? As one of the voices for the PAR Legal Hotline, I can tell you that “dating” is frequently a problem! The first paragraph of the current Agreement of Sale begins, “By this Agreement, dated ______” but page 11 allows for different dates following the signatures for Buyers and Sellers. Frequently, the date on page 2 and the date of the Buyers’ signatures are the same. However, the Sellers’ signatures can be dated several days later. What is the date of the agreement? It is rare that a seller accepts the first offer; when the Sellers change terms of the Buyers’ offer (and initial the changes), then submit this counter offer to the Buyers, what is the date of the Agreement? In most residential real estate transactions, rarely do Buyers and Sellers date the changes to the Agreement; when the negotiations extend across several rounds, how does one determine the date of the Agreement?
And why is it so important?
The PAR Agreement of Sale is filled with contingencies and obligations that must be completed or satisfied by a date certain. The date certain is established by using the “Execution Date” of the Agreement of Sale, which is defined as “the date when Buyer and Seller have indicated full acceptance of this Agreement by signing and/or initialing it.” This paragraph emphasizes that all changes to the Agreement should be initialed and dated but they rarely are. The Inspection Contingency paragraph allows the Buyer to terminate the Agreement without penalty. The timing for inspections and the right to terminate is calculated from the Execution Date. THIS is a principle reason why dating is so important… Similarly, the Purchase price and Deposits paragraph (2(A)2) requires a second deposit to be made within a specified number of days of the Execution Date. If a second, more substantial deposit, is not timely made, that failure may be a breach of the agreement which may permit a seller to terminate the agreement. This is another reason why dating is so important.
There are other critical dates in the agreement that stand independent of the Execution Date but are potentially as critical to the transaction. For instance, if the Date of Settlement is missing from the Settlement and Possession paragraph, the enforceability of the agreement may be called into question. Other timelines in the Agreement affect how deposits are tendered, determine when an offer expires, and have a critical impact on the disposition of money paid on deposit
Dating is never a problem until it is a problem. It is your responsibility to exercise the skill and professionalism expected by your industry. If you are uncertain as to what date is the Execution Date, confirm it with the other side (in writing) BEFORE there is conflict.