Contracts and Their Language
Dating is important!
All offers have deadlines. There are deadlines to respond, counter, or accept. There are also deadlines for contingencies; for example, how many days to inspect, to test, to appraise, and to line up financing. Of course, there is always the deadline to close. Deadlines can be expressed as being x days from some event, like 15 days from the date that the offer was accepted. Deadlines can also be expressed as a specific date.
Early in my career, I learned that deadlines are trouble for the unprepared. Here are three tricks I use to make my clients’ lives easier.
1. Exempt non-mailing days. Here’s an ugly situation that happened to (thankfully!) somebody else’s client. Earnest money had to be delivered within three days of the offer being accepted. As promised, the buyer mailed the earnest money immediately upon acceptance. The problem was that the offer was accepted on a Saturday. There’s no mail on Sunday. Worse, since the buyer missed the last Saturday pickup, the earnest money sat at the post office until Monday and did not arrive until Wednesday, which was one day late.
Late Monday afternoon, a better offer arrived. The seller instructed the listing agent not to remind the Buyer that the earnest money was missing, to wait up until 12:01 AM Wednesday morning, and then to deliver a Notice of Rescission. Then the seller accepted the better and higher offer.
While we may feel bad for the Buyer, the Seller and their listing agent did nothing wrong. How could this have been avoided? I always add “Days in which the US Mail is not delivered shall not count against the earnest money delivery deadline.” Sundays, holidays, and those infamous post office holidays are no longer a concern! No mail? No problem!
2. Exempt all holidays. Here’s something I learned the hard way. Many years ago, I countered and re-wrote a contingency for my seller that expired 15 days after the date of the accepted offer. I did that on June 19, which meant that the clock started on June 20. (Wisconsin law always exempts the day in which an offer is accepted. The clock begins the next day.)
How can I remember that date so many years later? Simple! The clock on my 15-day deadline started 15 days before July 4th. Guess who attended a mid-day 5-hour home inspection in place of his seller instead of enjoying a holiday with family and friends?
Beyond triple-checking dates, another line is very helpful. “Should a deadline fall on a weekend or legal holiday, that deadline shall be extended to the next business day.” If July 4th is a Friday, the deadline is extended to Monday. If July 4th is a Monday, the deadline gets extended to Tuesday.
3. Don’t forget about the days everybody sneaks out of the office. Remember my example of the 4th of July being on a Monday? Think about the Friday just prior. Will anybody be in the office? Will any inspectors be waiting next to the phone? Will any workmen be available to provide quotes?
Will the other Realtor or their clients be in town?
Except for the lowest level employees, there’s a good chance that whoever you absolutely need will have skipped town. Even if you’re lucky enough to get them on their cell phone, rest assured that they will be somewhere with spotty coverage, no computer, and no way to print, scan, fax, or send anything. (I’ve heard “I’m in the middle of a lake; call me next week” more than once in my career!) If you are closing on one of those days and the smallest thing goes wrong, rest assured that the only person with the power to fix anything will be gone until next week Tuesday at earliest.
Don’t tempt fate! Name the days you shouldn’t expect anybody to be available. In addition to the language from #2, also say “(Insert named dates here) are hereby deemed legal holidays for purposes of this provision.” I always recommend naming the day before and after any legal holiday that’s not already a weekend, the Friday before a holiday weekend, and the Monday after a holiday weekend. I also recommend always naming New Year’s Eve, the Friday after Thanksgiving, and even the opening weekend (Friday-Sunday) of deer season! Consider naming religious holidays and days surrounding religious holidays that are important to you. Don’t forget to consider observations by the other party, too. (If you notice Jewish decorations in a home you want to purchase, naming the dates of Yom Kippur will buy a lot of goodwill with the sellers.)
If you need a real estate broker who understands how to draft contracts, Mike Kwiatkowski is your man! He’s always ready and willing to help. He can be reached at email@example.com or by phone at (414) 207-2938.