Time is of the Essence in Real Estate Contracts
The meaning of this statement should be quite clear. Apparently, it’s not.
Many practitioners opt for the “kind of, sort of…” time. In other words, deadlines are just deadlines, if they are missed “so what”, and “ I am now ready to do what was specified”.
Unfortunately, this is not a negotiating strategy, it arises out of ignorance of the law.
Many contractual agreements contain the phrase “time is of the essence”. That means simply that “time” is an important and essential term in the agreement. This applies to most real estate contracts and is included in s. 26 of the OREA Standard Form Agreement of Purchase and Sale.
So, if matters as expressed as hours, minutes, days etc. then that is of utmost importance and must be observed diligently.
- This Offer is irrevocable until 8:00 pm on Monday.
The inspection condition must be waived by 5:00 pm on Wednesday.
By 8:01 pm, on Monday, it’s too late for the Offer to be accepted. It’s not a matter of simply writing in “8:00 pm” sometime later in the evening. The Offer is over. It’s simply too late. That would not create an “agreement”, and it is not a matter of “intention” of the parties, that is, that two parties effectively both wanted a deal. Intention only arises with respect to interpretation of a contract, not formation or compliance with its terms.
The inspection must be waived by 5:00 pm, not afterwards. The legal consequence was that the agreement became “null and void”, so, it’s over.
It means that EXACT time!
When times are changed or amended or extended, lawyers will always reference the fact that “time continues to remain of the essence”.
Otherwise, without this rule we would simply have “kind of, sort of ….” time. What would that mean? Maybe a few minutes, maybe an hour, perhaps a day or two? No one would really know. Commercial contractual obligations would simply go on forever. Parties require certainty, in order that they know their rights and what they can and cannot do.
The very casual interpretation of contracts and ignorance of the “time is of the essence” provision can lead to significant problems.
Brian Madigan LL.B., Broker