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What Happens if I Miss My Closing Date in My Contract?

| Feb 2, 2021 | Real Estate

Every real estate contract includes a provision for a date by which closing has to occur. But the vast majority of real estate transactions do not close on the contract closing date. That date is a target date by which all parties hope to have contingencies resolved and expect to be able to close. There are many reasons why a closing date may be delayed, and a firm closing date often will not be determined until a few days beforehand.

The closing date may be delayed because a contingency necessary to complete the transaction has not been satisfied. For example, if the buyer and the seller agree that some repairs need to be made prior to the closing, and those repairs are not complete, the closing may be delayed. If the buyer needs a little more time to obtain a mortgage commitment, it is easy enough for a seller to accommodate that need. Similarly, it is possible that a certificate of continued occupancy is required to close, and backlog with the municipality create a delay on the seller’s side that the buyer may accommodate.

If the delays on one side drag on for long enough that it creates damages on the part of either party, that party’s attorney may send a letter saying that time is of the essence. This sets a date by which the closing must take place, otherwise the party serving the notice may cancel the contract. This is usually reserved as a last resort as it would leave both parties without any compensation for costs paid as a part of the transaction and forces them to restart the process from scratch. It is usually more economical to allow a short delay than to terminate a contract over a few days.