Connecticut real estate contracts sometimes include the term “time is of the essence.” If you’ve ever purchased or sold a property, there’s a good chance you’ve come across this. But what does this clause mean? And what legal repercussions could it have on closing the real estate transaction? Understanding what “time is of the essence” means could impact your legal rights. The Connecticut attorneys of Aeton Law Partners draft and negotiate all manner of contracts. We can assist with your real estate contract today.
How a “Time Is of The Essence” Clause May Affect the Closing
The closing date in a real estate purchase contract is often seen as an inviolable, hard deadline. In reality, however, the closing date is more like a target. Courts generally allow the parties some room to delay, for a reasonable period of time, the actual closing. This is the default rule unless there is an express “time is of the essence” clause.
When parties to the contract set the closing, they can include “time is of the essence” language. This effectively obligates the parties to close by the specified date. Failure to close will then be considered a material breach, which could open the door to significant damages. Adding this phrase is a serious undertaking that should not be done without consulting an experienced contract attorney.
Considerations for Drafting “Time Is of The Essence” Clauses
“Time is of the essence” can clearly change the nature of a real estate contract. Clear and explicit language should be used in drafting this clause. The contract needs to evidence an unambiguous intent that the time to perform, indeed, is “of the essence.” Specific terminology should therefore be employed to convey this point. Connecticut courts will generally require such language before enforcing “time is of the essence” provisions.
The contract should avoid any vague or ambiguous language regarding the closing date. Including such language could nullify the “time is of the essence” language. Performance should not be required “in no event later than” or “on or before” a certain date. Rather, the careful drafter will use strong language to communicate that “time is of the essence.”
An Alternative to “Time Is of The Essence”
If the original contract lacks “time is of the essence” terms, there’s another way to effectuate it. A party can send clear and unequivocal notice to another party requiring the transaction to close by a certain date. Said notice can also state that failure to close by the date will be treated as a material breach.
However, the required date to close must be reasonable. It must allow enough time for the other party to actually perform its duties. Courts have held that 30 days is sufficient to meet this standard. But in determining reasonableness, every notice must be evaluated on its own, individual merits in light of the contract.
This type of notice can be sent before the closing date specified in the original contract. However, the actual closing date itself must take place after the original date. Consult a knowledgeable Connecticut contract attorney to learn more about these rules.
Ready To Assist With Your Contracts
Regardless of what type of contract you have, it’s essential to retain skilled legal counsel. Aeton Law Partners can help with the drafting, interpretation, and litigation of your contracts. Give us a call today at [phone] to schedule your confidential consultation.