Editor’s note: this article was updated on Oct. 16, 2020 to correct paragraph citations.
The PAR Standard Agreement of Sale contains various contingencies that require performance within a certain number of days. Pursuant to the Agreement, all dates and times for performance are “of the essence” – in other words, satisfying the contingencies within the specified number of days is essential to preserving both buyers’ and sellers’ rights under the Agreement.
A recent Hotline caller asked when exactly does the clock begin to run for counting the number of days to satisfy the contingencies or apply for a mortgage? The answer is found in Paragraph 5(C), which provides that the number of days will be counted from the “date of execution,” but not counting the date that the Agreement was executed. The “execution date” is the date when the Buyer and Seller have indicated full acceptance of the Agreement by signing and/or initialing it.
The caller expressed concern where there is a delay between the execution of the Agreement and actual delivery. An inordinate delay between the execution date and delivery date may result in severely handicapping a buyer’s ability to meet his performance obligations. The PAR Standard Agreement of Sale does not account for such a delay. So what do you do?
Where there is a delay from the execution date to the delivery of the Agreement, a licensee should recognize the possible dilemma, explain it to his client, and try to resolve it by an addendum amending the dates for performance to begin with the delivery date. If the other side refuses to accept this modification then make sure your client consults an attorney. The consequences could be dramatic.
A related question asks whether the days for performance are calendar days or business days. The Agreement states, “the number of days will be counted from the date of execution, excluding the day this Agreement was executed and including the last day of the period.” It makes no allowances for weekends or holidays – COUNT CALENDAR DAYS! Unless you agree otherwise, in writing, of course.