When a real estate contract contains terms referring to “time is of the essence,” this refers to a strict deadline being imposed by a party to the transaction, to when the transaction must close. Often times, if the closing date in a contract for a purchase and sale has passed, one of the parties will send the other party a notice stating that a new closing date is being provided for some time in the future and “time is of the essence.” If the closing doesn’t occur by the set date due to the fault of the seller, the buyer can cancel the transaction and request the return of all down payment funds. Additionally, the buyer has the right to pursue an action for specific performance to force the seller into selling the property. If the closing doesn’t occur by the set date due to the fault of the buyer, the seller may request the contract to be terminated. Additionally, the seller usually will not release the down payment funds being held in escrow, if any, until the buyer agrees to pay the seller a negotiated amount for costs and expenses resulting from the delay in the sale of the property.
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