In a typical real estate sales contract, time is of the essence. This means that certain milestones in the sale process must be met by specific deadlines. These deadlines begin within days of the contract's execution with inspection contingency periods. Following that are deadlines for the buyer to apply for his mortgage, obtain his mortgage commitment and request repairs as a result of the inspection. The seller's deadlines include responding to the buyer's repair requests and, where applicable, presenting information regarding community deed restrictions and covenants. The final deadline is the closing date, which the contract specifies. If the buyer or seller misses any deadline, the parties are out of contract and the sale is in danger of not closing. The parties can avoid going out of contract by requesting an extension of the deadlines that they're unable to meet.
Determine how long an extension you need. Give yourself a cushion, if possible, in order to lessen the chances that you'll need to extend again later.
Anticipate the consequences of an extension to the other party so that you can meet his objections with a fair and reasonable compromise.
Call the other party or her agent as soon as possible to tell her you need to extend and explain why. If she resists, negotiate a compromise. Follow your conversation with an email reiterating your need to extend and, if applicable, the concessions you're willing to make in return.
Prepare an addendum to your agreement of sale. Specify which contract deadline you're extending, and state the new deadline date.
Sign the addendum.
Present the addendum to the other party for his signature.
Tips & Warnings
- Lessen the chances that you'll need an extension by writing into the contract generous time periods for the completion of your contractual obligations.
- Know that if you're buying a foreclosure, the lender may charge you a per diem fee for extending closing. The lender will specify the per diem in its addendum to the sales contract. The addendum will change other terms of the contract, including the amount of time you have to complete inspections. Be prepared to move very quickly once the lender accepts your offer.
- Handle your transaction like a project. Dedicate a calendar to it. Use the deadlines to outline the "project." Fill in the tasks you must complete and the deadlines by which you must complete them in order to finish each contractual item on time. This way, you'll know right away if you're in danger of falling behind and can take immediate action to get back on track. If it's not possible to catch up, you'll know that quickly, too, and can request your extensions before things reach a crisis stage.
What Is a Mortgage Contingency?
Buying a home is an important event, one usually secured by presenting a large down payment and making monthly mortgage payments. But,...
- How to Write a Contract Addendum
How to Understand Deadlines on a Real Estate Contract
If there were no time limitations on the purchase contract for a real estate deal, the sale would run the risk of...
- How to Write a Real Estate Proposal
Addendum to the Agreement of Sale: Pennsylvania Real Estate
An agreement of sale is a sales contract that serves two purposes in Pennsylvania real estate. Initially, the buyer uses it to...