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Time is of the Essence!

Time is of the essence!

Time is of the essenceIn Pennsylvania time is of the essence in real estate. As a buyer from another state, or a mortgage provider we sometimes need to explain this as it is not the case in every state in the union.

For example, I had buyers from New York, who had no idea when they were actually going to settle on their home they were selling in New York State. That sounds so weird to me, but they just took it in stride as they were used to it. But, we had to extend their settlement in Pennsylvania due to delays in New York

In Pennsylvania, and especially on the Main Line, time is important. Everything in the agreement of sale is timed off the date that the last signature or initial is added. That is when it becomes a contract. The timing for deposits, inspections, mortgage applications, mortgage commitments and contingencies begin from the date of the last signature or initial. 

In Pennsylvania, if you are using the Pennsylvania Association of Realtors standard Agreement of Sale form this is all laid out for you . Paragraph 5 is headed Dates/Time is of the Essence. First it states when both parties must sign the agreement by, or the agreement becomes void. Secondly, it states that dates and times identified are of the essence and are binding. Then the next paragraph describes how the days are counted and when execution of the agreement begins and how all changes must be initialed and dated. Then it goes on to say how settlement can only be extended by mutual agreement of both parties. Finally the paragraph explains how some  terms and time periods are pre-printed but these can be changed if both parties agree.

Let me give you an example, under the inspection contingencies our agreement has a blank for the days for the inspection period, if you leave it blank it defaults to 10. This 10 days is for you to have your inspection d produce a reply to the seller following your inspection; this reply can beyour are pulling out, you will proceed, or you are asking seller to fix or credit the buyer certain sums as per the inspection report. I was always taught to never leave anything blank, but to insert the 10 if I wanted 10. The seller gets 5 days if left blank to respond from the end of the 10 day period, and the buyer has 2 days to respond to the sellers reply after the 5 days response time. This gives a total of 17 days total. We just listed a home recently where within days we had an offer that was acceptable to the seller, but the inspection period was set to 10 days, 5 days and 2 days as per the defaults in the agreement. He did not want the home to be off the market that long so asked to tighten the inspection period up with that initial period cut to 7, the reply period cut to 2 and then the buyers response time to stay at 2. Cutting the inspection period to a total of 11 days total. 

In reality, this inspection can be shorter if the parties to the agreement can reach agreement more quickly. However, if you don't complete a contingency or an inspection and present the response within the period stated it is the same as waiving it.

This is where choosing a local mortgage company/provider can be important. I have had mortgage companies from out of state miss deadlines because they do not understand the importance of time is of the essence. Where prices are rising or the market is short of inventory, lack of response from a mortgage company can give the seller a reason to terminate the contract and put the house back on the market. As a buyer you may then be disappointed if the seller refuses to go to settlement, accuses you of breach of contract and attempts to hold on to your deposit, tying it up in escrow.

So using a knowledgeable local Main Line Realtor, like Nick & Trudy Vandekar who understand Time is of the Essence, and work to make sure that everybody in the transaction, mortgage companies, inspectors and title companies all understand the relevant dates and their importance is essential.

If you are buying or selling on or around Tredyffrin Easttown or along the Main Line we can help you,  contact us or connect

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Comment balloon 22 commentsNick & Trudy Vandekar, 610-203-4543 • August 18 2014 08:03AM

Comments

Hi Nick and Trudy

Thank you for the description of the term "time is of the essence" and it importance in the contract.

Posted by Elite Home Sales Team, A Tenacious and Skilled Real Estate Team (Elite Home Sales Team OC) about 4 years ago

Nick & Trudy, I miss having all of the contracts I see fall under "time is of the essence"!  One of the things I love about working on purchases in PA, once that contract is signed, the parties start moving.  Much better flow when all parties are working witht he same set timeline.

Posted by John Meussner, #MortgageMadeEasy Walnut Creek, CA 484-680-4852 (Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA,) about 4 years ago

I'm always ensuring that we get things done in a timely manner - we too have "time is of the essance," is our contracts. No time to dilly dally. ;) 

Posted by Debb Janes EcoBroker and Bernie Stea JD, REALTORS® in Clark County, WA (ViewHomes of Clark County - Nature As Neighbors) about 4 years ago

Nick & Trudy-I didn't realize that "time is of the essence" is more than just a saying but included in contracts.   Excellent explanation.

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) about 4 years ago

John very true, it is a good feeling ans always worth making sure you are all on the same track.

Debb, I think it makes sense, not knowing when your closing is going to be has to be more stressful.

Kathy, thanks, it is always important to read the contract and understand what it means.

Posted by Nick & Trudy Vandekar, 610-203-4543, Tredyffrin Easttown Realtors, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) about 4 years ago

What I learned

Thanks you for my Ah ha moment Nick & Trudy Vandekar 

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) almost 4 years ago

"Time is of the essence" is something more people should pay attention too! Enjoy your day!

Posted by Wayne Martin, Real Estate Broker (Wayne M Martin) almost 4 years ago
Wayne, when I first started in real estate I never realized time is of the essence is not in use in every state.
Posted by Nick & Trudy Vandekar, 610-203-4543, Tredyffrin Easttown Realtors, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) almost 4 years ago

I would love to have "time is of the essence" in New York... We just closed on a property that we sold 7 months ago... that's crazy especially since it was an investment propety of ours with taxes in excess of 14 thousands dollars a year... so it is easy to figure out what that dela cost us... "time is of the essence" certainly sounds like a great thing for the seller...

Posted by Richard and Beth Witt, Long Island Cash Home Buyer 516-330-6940 (Long Island Cash Home Buyer) almost 4 years ago

''Time Is Of The Essence" is at the very top of Maryland contracts. It is a boxed paragraph even before the date or names of buyers and sellers.

Posted by Margaret Rome, Baltimore Maryland, Sell Your Home With Margaret Rome ( HomeRome Realty 410-530-2400) almost 4 years ago

Nick and Trudy -  I see that Pennsylvania has some good guidelines.  So now I know what "Time is of the Essence" means.

Posted by Grant Schneider, Your Coach Helping You Create Successful Outcomes (Performance Development Strategies) almost 4 years ago

It is very unfortunate, but dates put in contracts here don't seem to matter to anyone but my clients and me.

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, 914-419-0270, kat@thehousekat.com) almost 4 years ago

Nick & Trudy:  You must have been overhearing my comments regarding this very topic this morning!  Uncanny!  It's becoming the norm for clients and referral partners to initiate a transaction, then disappear.  Then re-appear at the last minute wondering why a transaction isn't ready to close.  Information and documentation moves transactions along.  And often time is truly of the essence.  When people disappear or don't respond it causes huge problems ...

Gene 

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) almost 4 years ago

N&T~So very VERY important! Thank goodness for my principal broker who oversees my paperwork. A master calendar might be in order. Especially if you're doing it all yourself like I do.

Found you on Kathy Streib's post!

Posted by Gayle Rich-Boxman Fishhawk Lake Real Estate, "Your Local Expert!" 503-755-2905 (John L Scott Market Center) almost 4 years ago

Rich & Beth that just seems crazy that it can be delayed or just not come to settlement so long.

Margaret, that is a good idea, it is not at the top but quite high in the contract in PA.

Grant, thanks for stopping by.

Kat, NY clients were where I learnt about timeis of the essence is not everywhere. I felt very sorry for them just being in limbo.

Gene, thanks, it is amazing how difficult it is to get hold of people when you need them.

Gayle, it is a good idea. I use a spread sheet where I enter the date of the signing and it fills in the important dates for the agreement. I then send this to my clientand the agent on the other side of the transaction saying this is what I understand the dates to be, just so we are all on the same page.

Posted by Nick & Trudy Vandekar, 610-203-4543, Tredyffrin Easttown Realtors, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) almost 4 years ago

This is where choosing a local mortgage company/provider can be important. I have had mortgage companies from out of state miss deadlines because they do not understand the importance of time is of the essence

 

I just had this happen.  The lender just blew the commitment date - even though I had sent emails explaining the time of the essence and the consequences to the buyer. I wish there was some recourse against the lender.  I went a head an got and extension since the lender was not even responding to may emails and phone calls.  This is UNACCEPTBLE! 

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) almost 4 years ago

Time is of the Essence in DC/Marylvand/Virginia also.

Even with that, I still remind my clients as we get into and through the contract. One big ticking clock.  I'm not sure I'd know how to work any other way with a contract, it would be so disconcerting.

Posted by Claude Labbe, Realty for Your Busy Life (Real Living | At Home) almost 4 years ago
Joan, maybe the new mortgae rules should have something in them, comments mortgage guys. I like the mortgage commitments that say right across the top, This is not a commitment, and theloan officrr says that is what they give for a commitment. Claude, I agree, must be impossible if you dont have a deadline.
Posted by Nick & Trudy Vandekar, 610-203-4543, Tredyffrin Easttown Realtors, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) almost 4 years ago

Interesting blog post..glad I didn't miss it...I saw it from Kathys' weekly summary post!

Posted by Kristin Johnston - REALTOR®, Giving Back With Each Home Sold! (RE/MAX Realty Center ) almost 4 years ago

Kristin, thanks for visiting

 

Posted by Nick & Trudy Vandekar, 610-203-4543, Tredyffrin Easttown Realtors, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) almost 4 years ago

Good solid explanation Nick and Trudy. Look forward to seeing you in December at Triple Play again! 

Posted by Erica Ramus, MRE, Schuylkill County PA Real Estate (Erica Ramus - Ramus Realty Group - Pottsville, PA ) almost 4 years ago

Erica, thanks, yes Triple Play is always a good trip.

Posted by Nick & Trudy Vandekar, 610-203-4543, Tredyffrin Easttown Realtors, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) almost 4 years ago

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