Time is of the essence!
In 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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