Time is of the Essence Provisions in Florida Real Estate Contracts: What Does This Contract Language Mean to You?
Posted By Larry Tolchinsky on November 5, 2013
Florida real estate contracts have lots of paragraphs and provisions — what many consider to be boilerplate language – which are seen in purchase contract after purchase contract related to buying or selling of Florida real estate. No one – buyer or seller – is surprised, as a general rule, to see lots of “legalese” in even the simplest Florida real estate agreement.
(Under Florida law, all sales of Florida real estate must be documented in writing and this document must be signed by the parties to the contract or their lawful representatives. Fla. Statutes § 725.01 (2013).)
These days, a common clause found in Florida real estate contracts is the “time is of the essence” provision. This seems to be straightforward enough issue, right? Time requirements are important to the transaction, vital enough that specific dates are included in the contract language.
Boilerplate Florida Real Estate Contract Language: “Time is of the Essence”
Still, the wording “time is of the essence” isn’t considered to be something that must be written into a Florida real estate agreement as a general rule (see, Garcia v. Alfonso, 490 So. 2d 130 (Fla. 3d DCA 1986)). It’s not really “boilerplate” because it’s not a standard item for a real estate transaction.
Moreover, if the phrase “time is of the essence” is NOT placed into the Florida real estate contract language, then Florida law will not consider time to be vital (of the essence) to closing the deal. In that case, the deal will close within a reasonable time from the date set forth in the contract based upon circumstances, without the pressure of a true, hard and fast deadline.
If time or a specific date is vital to the real estate deal, and there can be all sorts of reasons why this might be the case, then Florida case law requires that the contract specifically state “time is of the essence.” Otherwise, the sales contract can remain binding until the closing is completed and the deal is done.
If “time is of the essence” is included in the Florida real estate contract, then the closing date stated in the contract is a binding deadline, and if the Florida real estate sale isn’t closed by that deadline, then someone is in breach of contract. The party that failed to perform is in default and is subject to the default provision of the contract, which can include the forfeiture of all deposits.
When are Florida “Time is of the Essence” Provisions Used in Real Estate Contracts?
Lots of real estate deals are made in Florida every day — maybe not as many as in years past, but lots of real estate sales are being made. Condos, office buildings, raw land, single family dwelling residential homes, vacation properties, etc., are being purchased from Florida sellers all the time.
When time or a specific date is important to the deal, then a “time is of the essence” clause should be included in the contract to reflect that requirement – most Florida real estate agreements will have one or more deadlines listed within it setting forth a deadline to complete a right or an obligation – it can be by a certain date, or within a number of days (e.g., closing shall be thirty (30) days from the effective date of this agreement).
What Happens When the Deadline is Missed in a Florida “Time is of the Essence” Real Estate Deal?
Including the “time is of the essence” language in the Florida real estate agreement brings specific legal duties upon the parties to get things done in a specific time frame. If the buyer or the seller fails to perform their right or duty by the deadline, then the other party has the ability to halt everything and label that failure as an “anticipatory repudiation” or breach of the contract, and call the whole thing off. They can sue for breach of contract and seek damages or they can enter into negotiations to get the deal done in a different way. They can also let the transaction move forward with new deadlines, trying to get the deal done as fast as they can.
Different situations mean different responses to a missed deadline in a “time is of the essence” contract under Florida law. One thing is clear, however: failure to meet a deadline in a “time is of the essence” contract to sell real estate puts the power and control over what happens next in the hand of the other side. Not a good place to be.
Larry Tolchinsky’s Tip:
Florida real estate contracts with “time is of the essence” clauses can sometimes be difficult to read when the deadlines aren’t clearly laid out. When is the deadline anyway?
For instance, if something is to happen “within thirty (30) days” of a certain event, then is that 30 day calculation done by counting every single calendar day, or just the business days (when businesses like banks are open for business)?
What about a federal holiday when courthouses and financial institutions are closed (say, for example, the Fourth of July) – does this get skipped when counting the 30 day contract deadline?
What happens if the time of the essence provision doesn’t say it applies to all provisions of the contract?
Sounds silly to some, but when a Florida real estate transaction is important to the parties and the closing date is getting near, the method of counting that deadline can become a very serious matter – say when loan approval isn’t nailed down yet, or the inspections aren’t in and the Closing Date is looming.
Savvy Florida real estate lawyers often sidestep this potential conflict by including deadline calendars in the contract (e.g., this must be done by Monday, July 12). If that deadline is not met, then notice to the other side in writing as soon as possible is important to notify them that the deadline has been missed, objecting to this failure to meet the deadline in the manner outlined in the Florida real estate contract’s notice provisions. After that, negotiations begin on how to resolve the problem and get the deal done.
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at firstname.lastname@example.org, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.