Real estate contracts are filled with boilerplate provisions. Examples of boilerplate provisions in contracts include the prevailing party attorney fee language or the radon gas disclosure provision. Each of these boilerplate provisions contains important legal rights or obligations that should be carefully studied to ensure that such provisions are applicable and appropriate to the real estate transaction being contemplated by the parties.
Another example of a boilerplate provision is a 5 word sentence that is contained in many contracts, including real estate and business contracts, which simply provides that “Time is of the Essence.” The clause means that the parties have agreed that all deadlines in the contract are to be strictly complied with or the party that fails to meet contractual deadline could be in breach of the contract. Florida courts generally assume time is not of the essence in real estate contracts and for the parties to expressly include such a provision in the contract or time will not be considered “of the essence” in closing the transaction. Furthermore, “time is of the essence” can be waived or forfeited by party conduct, if a clear written objection was not made by the party seeking to enforce the clause to put the breaching party on notice.
“Time is of the essence” is an important clause in a contract if the parties seek to strictly abide by the deadlines in the contract. Please keep in mind that other provisions in the contract can make it cumbersome to figure out a specific deadline. For example, many contracts provide the deadlines in the number of days (i.e., closing shall be 30 days from the effective date). To determine the date of the deadline, the time provision should be reviewed in the contract, to stipulate whether the days are calculated in calendar or business days. A misreading of the time provision in the contract can have disastrous consequences if a time is of the essence clause is enforced in the contract.
Given the technicality of deadlines in the contract, I have two practice pointers. Firstly, if you are a buyer or seller in a contract, calculate the deadlines and circulate them to the other party and ensure that a written record (email is fine) of agreement to contractual deadlines is made. Secondly, if a party violates a deadline in the contract, make sure that a clear written objection is made (and delivery and form of the written communication is made in compliance with the notice provision in the contract).
Some may assume, at their peril, that boilerplate provisions in a contract have no meaningful impact on the contract. Blalock Walters’ Real Estaste group has a great deal of experience in reviewing, drafting and negotiating real estate contracts, including boilerplate provisions that can trip up even the most sophisticated of buyers and/or sellers. Please contact us if we can be of assistance to you in this area.