The saying “timing is everything” is especially important when adherence to time frames referenced in purchase agreements could mean the transaction runs smoothly, or you find yourself facing a mad client and/or having to defend your actions or non-actions.
Most purchase agreements have very defined time frames in which actions must occur. Some of those time frames involve the date by which the escrow is to close, how long the Buyer has to perform his/her inspections of the property and documentation, how long the Seller has to provide the Buyer with disclosures relevant to the property, and the list goes on and on.
In the not too distant past, purchase agreements provided for “passive” approval of various contingencies, such as the Buyer’s approval of their inspections of the property and documents. By the “passive” method of approval, the parties did not have to release the pertinent contingencies in writing. The contingency was automatically approved if the party did not “object” to the contingency before the deadline date. Now, most purchase agreements have been modified so the party must take an “active” role in the approval or disapproval process, which means that the party must produce written approval or disapproval of a stated contingency on or before the deadline date. Failure to do so could result in the other party delivering to the defaulting party a letter stating they have “X” number of days to remove the contingency or the transaction is canceled and the Buyer’s deposit is at risk.
The easiest way to monitor the various time frames of a transaction is to document on a sheet of paper, or in your computer, each event (such as the date the Buyer must have his/her earnest money deposited into escrow), the deadline date of the event, followed by another column showing the date the event was completed. There are many computer programs (such as Outlook) that have a calendar and/or task module associated with the program where you can easily put the information in, the program will give you reminders, and you can check off the date of completion of the events. You can even use these programs to remind yourself of your spouse’s birthday or anniversary date!
No matter what program or method you use, it is critical to stay on top of your reminders/tasks. You really don’t want to open yourself up to liability should you fail to take action by a date referenced in the purchase agreement. Even worse, you don’t want to forget your spouse’s birthday or your own anniversary date!
These are just a few words of wisdom. I hope they will be helpful to you.
About Suzanne Tikker
Suzanne Tikker joined Haedrich & Co., Inc. with 33 years of experience as an escrow officer and 2 years as a residential lender. Her background in escrow and lending has proved to be invaluable in overseeing the complex contracts, purchase agreements, leases, and escrow transactions of the office. Suzanne is also a licensed real estate salesperson. This experience, along with her expertise and professionalism make Suzanne a valuable asset to the company and the commercial real estate clientele we serve. Suzanne is also very involved in the North State Escrow Association, as well as the Exchange Club of Redding.