Contract Dates & Deadlines Explained...

Real Estate

What exactly do contract dates and deadlines mean to you? Perhaps this article will explain some of these daunting line items and help you to navigate through your real estate transaction easier. I recommend to my clients that they make a copy of the dates and deadlines of their contract and keep them close for easy reference. 

 

The Reference column references the corresponding section of the Contract.

Item No. 1 – Alternative Earnest Money Deadline. Use this deadline if you are not delivering the earnest money with the offer. Typically this deadline would be just a few days after offer and/or acceptance or as I typically put in my contracts:  Earnest Money Due 2 business days after MEC.  MEC simply means, Mutual Execution of the Contract or the date upon which both parties have signed this contract.

Item No. 2 – Record Title Deadline. Closing/Title Companies can produce title commitments relatively quickly, but in general they appreciate 5-10 days from date of offer and/or acceptance. This deadline applies to title commitment and all recorded documents, such as covenants. Any information relating to the title of the property being sold must be obtained by this date.

Item No. 3 – Record Title Objection Deadline. Considering that the amount of paperwork the Buyer needs to review could be quite lengthy, give 5-7 days AFTER the Title Deadline.  If you object to anything in the title, this is the deadline to do so.

Item No. 4 – Off-Record Title Deadline. Any documents or issues known by the seller but not in the public record must be disclosed by this date. An example of this would be friends to allow the use of land or property.  If the agreement is not legally recorded it must be disclosed by the seller to the buyer by this date.  Another example is a lease or easement.

Item No. 5 – Off-Record Title Objection Deadline. Again, to assist in keeping track of dates, many Brokers make this deadline the same as the Title Objection Deadline, even though in most cases it wouldn’t necessarily take a Buyer 5-7 days to object.

Item No. 6 – Title Resolution Deadline. This is the date by which all issues concerning title objections must be in order by. This date can run up to the day of closing, especially if the title is clouded or defect in any way.

Item No. 7 – Right of First Refusal Deadline. This is a right granted by the owner of the property to another entity (the Holder). The Holder has the right to purchase the property in question in the event the owner receives and acceptable offer to buy.  Example:  A landlord may grant one to a tenant who wants to buy the property when the landlord is not ready to sell immediately.  

Item No. 8 – Association Documents Deadline. These items are not recorded, but are collected by the seller or sometimes by our Closing/Title Companies. The title company does charge a convenience fee to assist in collecting association (or Common Interest Community) Documents, but contractually the responsibility falls on the Seller.  Here's a list of typical HOA documents needed:  Articles of Incorporation, By-Laws, CC&R's (Covenant, Conditions & Restrictions), HOA yearly budget, Monthly financials, Last annual meeting minutes (from last 6 months), Rules and Regulations, Policies and Procedures, (if any) Reserve Study (if any), and Design/Architectural Guidelines (if any).

Item No. 9 – Association Documents Objection Deadline. Keeping in mind that this could be a substantial amount of paperwork to read through, and that the Buyer may wish to ask questions of the HOA, allow 5-7 days after the CIC Documents Deadline, again depending on the length of your transaction period.

Item No. 10 – Seller’s Property Disclosure Deadline. Usually, this disclosure is filled out prior to the seller listing their home and is ideally provided prior to the time the Buyer signs the Contract.

Item No. 11 – Loan Application Deadline. This deadline can vary depending on the Buyer and their lender. Sometimes Buyers have completed the pre-approval process all the way through underwriting and have selected their lender prior to submitting the offer. However, if the Buyer wishes to “shop” some more – or hasn’t even begun – allow 5-10 days from date of offer and/or acceptance.

Item No. 12 – Loan Objection Deadline. Depending on the length of the Contract period, this deadline should fall at least 5-7 days BEFORE Closing, in order to allow adequate time for the lender and Closing Company to finalize figures.

Item No. 13 – Buyer’s Credit Information Deadline. In the case of owner carry financing, this deadline applies to the Buyer supplying the Seller with financials, a credit report, etc. Normally, this is 10 to 14 days from date of offer and/or acceptance..

Item No. 14 – Disapproval of Buyer’s Credit Information Deadline. This is the Seller’s opportunity to decline the Buyer based on the information provided, so allow 3-7 days after the Buyer’s Credit Information Deadline.

Item No. 15 – Existing Loan Documents Deadline. Only applicable for a buyer assuming the loan, by this deadline the Seller must provide all current loan documents to the Buyer for review. From date of offer and/or acceptance, 3-5 days is adequate.

Item No. 16 – Existing Loan Documents Objection Deadline. Once the Buyer receives the Seller’s current loan information, they have the right to review the terms and object or decline. Provide 5-7 days after the Existing Loan Documents Deadline.

Item No. 17 – Loan Transfer Approval Deadline. Again this is applicable only for assumptions, this final deadline applies to the lender approving the assumption. Seven days prior to Closing will usually allow enough time for the lender and Closing Company to communicate. Remember, however, that the lender is not a party to the Contract so is not bound by the deadlines, so pay attention as to whether you must prepare an amend/extend to allow more time. If this deadline passes without lender approval, the Contract terminates. Note: Owner carry loans and assumptions can be very challenging and contain many details. If a Broker is inexperienced in these types of financing, consult your Managing Broker, seasoned mentor or attorney.

Item No. 18 – Seller or Private Financing Deadline. If any portion of the financing of a transaction will be by private or seller financing then this deadline applies. The buyer must decide by this date if the financing being offered is satisfactory. If not, the buyer may terminate the contract.

Item No. 19 – Appraisal Deadline. It may be wise to check with the lender regarding this deadline, as appraisers can sometimes become burdened and behind schedule. However, in general, this deadline should fall 3-5 days before the Loan Conditions Deadline. If box 6 a. 4 is checked, Buyer shall have the option to terminate this contract if the Purchase Price exceeds the property's valuation determined by an appraiser.  Termination of this contract must be received in writing by the appraisal deadline.

Item No. 20 – Appraisal Objection Deadline. Perhaps the easiest of all objections is the appraisal objection. Either the appraisal matches the price or it doesn’t. By this deadline, the Buyer must submit in writing that the valuation is less than the purchase price. At this point, a couple of things can occur: a) the Seller can come down in price to match the valuation; b) the Buyer can bring the difference in cash or c) the Contract can terminate.

Item No. 21 – Current Survey Deadline. This deadline and Section can vary greatly based on your Buyer’s needs and the property, which will be covered in greater detail later. If the Buyer is obtaining an Improvement Location Certificate, in most cases 10-14 days from date of offer and/or acceptance should work. However, if the Buyer wishes to acquire an Improvement Survey Plat, that could take 3-4 weeks depending on the availability of the surveyor and size of the parcel.

Item No. 22 – Current Survey Objection Deadline. Once the Buyer has received a copy of the ILC, ISP or another survey provided by the Seller, the Buyer has the right to review it, which should only take 2-5 days from the Survey Deadline.

Item No. 23 – Current Survey Resolution Deadline. If the buyer has any objections or issues with the property survey, the objection must be received by the seller on or before this date. If the buyer and seller have not agreed in writing to any settlement of the survey objection AND the buyer does not withdraw the objection(s) in writing, then the contract terminates on this date.

Item No. 24 – Inspection Objection Deadline. It’s really recommended that the Buyer attends the inspection, so consult with them regarding their schedules as well as the seller's schedule.  Also, in Colorado radon inspection often takes place.  This inspection takes 48 hours to get a radon reading.  Sellers will need to allow the radon company to bring the testing machine into their home either prior the inspection or to be picked up a couple days after inspection. Most Brokers prefer to get the inspection done as quickly as possible, within reason. From the date of offer and/or acceptance, 10-15 days is usually adequate.

Item No. 25 – Inspection Resolution Deadline. All inspection issues must be resolved by this date.  The buyer may decide to back out of the contract or the buyer and seller may agree to have items fixed, lower the sales price or any combo of the two. This may appear to be a quick turnaround, but keep in mind that the Seller may need to obtain second opinions and/or estimates for work to be performed. Allow 3-5 days after the Inspection Objection Deadline. And remember – if a resolution is not reached on or before this deadline, the Contract automatically terminates on the Inspection Resolution Deadline.

Item No. 26 – Property Insurance Objection Deadline. This is the only condition that jumps straight to an objection deadline. Prior to this date, the Buyer must obtain as many bids as they’d like for home owner’s insurance. If the insurance does not meet their satisfaction, they must terminate in writing by this deadline. Much like the Loan Application Deadline, Buyers will vary greatly as to their progress at the time of Contract acceptance, but in general 10-15 days will suffice.

Item No. 27 – Due Diligence Documents Delivery Deadline. If there are additional documents that would aid the Buyer in their due diligence, such as determining the use of the property with zoning matters, historical value, etc., the Seller will supply those documents by this deadline. Ten to 14 days from date of offer and/or acceptance is a reasonable amount of time.

Item No. 28 – Due Diligence Documents Objection Deadline. Based on the information provided, via documents, receipts, warranties and operation manuals, the Buyer should be allowed 5-7 days to review and object if necessary.

Item No. 29 – Due Diligence Documents Resolution Deadline. Just like the Survey Resolution Deadline the parties must agree to a settlement of buyer objections before this date or the contract will terminate. The buyer also the right to withdraw the objections in writing.

Item No. 30 – Conditional Sale Deadline. If the buyer has a property to sell before they can complete the purchase, list that property here. If it is not sold and closed by this date the buyer may terminate this contract.

Item No. 31 – Closing Date.  Ideally, this is decided upon mutual consent by the buyer and seller.  Consult both parties to find out which works best. Sometimes this is dependent on when the loan can close.

Item No. 32 – Possession Date. If Possession will occur on the same date as Closing, you may enter “Date of Closing” in this box. If possession is other than the day of closing, put the specific date.  Sometimes there's a Post Closing Occupancy Agreement with a contract to buy and sell, which will push out the possession date for the buyer.

Item No. 33 – Possession Time. Again, if possession will be immediately after Closing, you may enter “Delivery of Deed”, or put a specific time. Caution: Buyers and Sellers do not always sign closing documents at the same time, which can cause confusion as to when Closing truly occurs. As always, being specific is preferred.

Item No. 34 – Acceptance Deadline Date. Considering that the Listing Broker must likely meet with the Seller to review the Contract, give an appropriate amount of time. Most commonly used is 24 – 48 hours. Remember: this deadline applies only to acceptance; if the Seller is countering, a new deadline is established on the Counterproposal.

Item No. 35 – Acceptance Deadline Time. Again, consider the timing so the Listing Broker and Seller can reasonably discuss. Is midnight an acceptable deadline, probably not.