Tick Tock

Calculating Deadlines in the Offer to Purchase


 Cori Lamont  |    May 02, 2012
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Over the course of the last few years, one consistent conversation has revolved around calculation of dates and deadlines in the Offer to Purchase. While the majority of deadlines in the preprinted state-approved offers run from acceptance, some are calculated from date of the offer, date of closing and also vary depending on hours, days and business days.

All of the revised offers to purchase include the same definition of Deadlines. However, the parties may agree to modify the terms of the contract, including altering the preprinted deadlines in the offer. For example, the parties may agree that deadlines will run from binding acceptance, or a specific event such as lender approval. The parties may also modify the deadline provision to include all state and federal holidays when calculating business days or to provide that a deadline expires at 9:00 p.m. rather than midnight of the last day in the time frame. Whatever the agreement, the parties and the agents need to have a clear understanding of how to calculate and determine when deadlines begin to run and when deadlines expire.

‚Äú‚ÄėDeadlines‚Äô expressed as a number of ‚Äėdays‚Äô¬†from an event, such as acceptance, are calculated¬†by excluding the day the event occurred and by¬†counting subsequent calendar days. The deadline¬†expires at midnight on the last day. Deadlines¬†expressed as a specific number of ‚Äúbusiness days‚Ä̬†exclude Saturdays, Sundays, any legal public¬†holiday under Wisconsin or Federal law, and any¬†other day designated by the President such that¬†the postal service does not receive registered¬†mail or make regular deliveries on that day.¬†Deadlines expressed as a specific number of¬†‚Äúhours‚ÄĚ from the occurrence of an event, such as¬†receipt of a notice, are calculated from the exact¬†time of the event, and by counting 24 hours per¬†calendar day. Deadlines expressed as a specific¬†day of the calendar year or as the day of a specific¬†event, such as closing, expire at midnight of that¬†day.‚ÄĚ

Calculation of deadlines

Typically, the easiest way to illustrate the¬†calculation of deadlines is with an example.¬†Such as, the buyers inserted 10 days on line¬†421 of the Inspection Contingency in the¬†WB-11 Residential Offer to Purchase. The¬†offer was signed and dated by the sellers¬†as ‚Äúaccepted‚ÄĚ on Thursday, but was not¬†delivered until Friday morning. How are the¬†10 days counted?

Per line 421, unless modified, the deadline of the Home Inspection Contingency is measured from the date of acceptance. Thus, the home inspection deadline is counted or calculated from the date the offer is accepted, that is, the date when all parties have signed the offer. Lines 174-181 provide guidance concerning counting of days.

‚ÄúAcceptance occurs when all Buyers and Sellers¬†have signed an identical copy of the Offer,¬†including signatures on separate but identical¬†copies of the Offer.‚ÄĚ

Therefore, from the facts provided,¬†acceptance occurred when the sellers signed¬†on Thursday. Thus we begin counting Friday¬†as day one, Saturday ‚Äď two, Sunday ‚Äď three,¬†Monday ‚Äď four, Tuesday ‚Äď five, Wednesday¬†‚Äď six, Thursday ‚Äď seven, Friday ‚Äď eight,¬†Saturday ‚Äď nine and Sunday as day ten.¬†The inspection contingency deadline would¬†expire on the second Sunday at midnight.

Different time frames

  • Date of this offer:¬†While the majority of deadlines run¬†from the date of acceptance, including¬†those for earnest money, the Financing¬†Contingency, the Appraisal Contingency¬†and the Inspection Contingency, there are¬†some provisions in the offer that run from¬†a different event. For example, the timing¬†in the Special Assessment/Other Expenses¬†provision is one of the most unique in the¬†offer.¬†Special assessments, if any, levied or for work¬†actually commenced prior to the date of this¬†Offer shall be paid by Seller no later than¬†closing. All other special assessments shall be¬†paid by Buyer.¬†This provision is the only one in the¬†preprinted offer that hinges on the date¬†of the offer as opposed to events such as¬†acceptance or closing and is often overlooked¬†because it is typically on an offer page that¬†does not include any blank lines. Thus if the¬†special assessment was levied the day after¬†the offer, the buyer would be on the hook for¬†the expense.
  • Days before closing:¬†Another hidden treasure for timing is¬†provided in the Title Evidence section,¬†specifically the Provision of Merchantable¬†Title. For purposes of closing, title evidence¬†shall be acceptable if the required title insurance¬†commitment is delivered to Buyer‚Äôs attorney¬†or Buyer not less than 5 business days before¬†closing‚Ķ In these situations, we calculate out¬†from closing as opposed to after acceptance.¬†Keep in mind that not all offers are created¬†equally as the Vacant Land, Farm and¬†Commercial offers express this specific¬†deadline as from days of acceptance, which¬†means it runs earlier in the transaction.

Days vs. business days

Deadlines expressed as a specific number of¬†‚Äúbusiness days‚ÄĚ exclude Saturdays, Sundays,¬†any legal public holiday under Wisconsin or¬†Federal law, and any other day designated by¬†the President such that the postal service does¬†not receive registered mail or make regular¬†deliveries on that day.

There is often an impression that days and business days are interchangeable, and that is incorrect. The definition of Deadlines specifically makes a distinction between the two because a four-day deadline is shorter than a four-business-day deadline. The majority of deadlines in the offer are expressed as days, however in addition to the merchantable title in the real estate condition report provision, the right to rescind is statutorily two business days. Another example of the use of business days in an offer to purchase is provided in the WB-14 Residential Condominium Offer to Purchase and condominium law; the statutory language provides a buyer’s right to rescind of five business days.

The simplest way to remember the¬†distinction between days and business days¬†is that ‚Äúdays‚ÄĚ run Monday through Sunday,¬†while ‚Äúbusiness days‚ÄĚ run Monday through¬†Friday and exclude holidays and other noted¬†exceptions.

Hours

Deadlines expressed as a specific number of¬†‚Äúhours‚ÄĚ from the occurrence of an event, such as¬†receipt of a notice, are calculated from the exact¬†time of the event, and by counting 24 hours per¬†calendar day.

The offers also include at least one reference to a deadline that utilizes hours. The Closing of Buyer’s Property Contingency provides, within _____ hours of Buyer’s Actual Receipt of said notice … There is not currently any other contingency or provision preprinted in the offer that includes an hour deadline. Agents should also note the use of Actual Receipt in this provision.

‚ÄúActual Receipt‚ÄĚ means that a Party,¬†not the Party‚Äôs recipient for delivery, if¬†any, has the document or written notice¬†physically in the Party‚Äôs possession,¬†regardless of the method of delivery.

Once the buyer has the bump notice, not the agent, the clock begins to run hour by hour, 24 hours per calendar day. Therefore it more likely than not that a 72-hour deadline will run out faster than a three-day deadline.

Time is of the essence

If ‚ÄúTime Is of the Essence‚ÄĚ applies to a date or Deadline, failure to perform¬†by the exact date or Deadline is a breach of contract. If ‚ÄúTime Is of the¬†Essence‚ÄĚ does not apply to a date or Deadline, then performance within a¬†reasonable time of the date or Deadline is allowed before a breach occurs.

Under general contract law, a deadline in a contract for which time is NOT made of the essence does not have to be complied with precisely on the DATE (or time) indicated. The courts will say that, if given the circumstances of the contract, performance was reasonably close in time, it will not be a breach of contract to have missed the deadline. If time is made of the essence as to a particular deadline, failure to perform by the precise moment of the deadline will be a breach of contract. Immediately thereafter the party awaiting performance can give notice that the contract has been cancelled due to the breach of contract.

If a non-‚Äútime is of the essence‚Ä̬†deadline is missed by a party, the¬†other waiting party may unilaterally¬†notify the non-performing party that¬†performance must occur by the end¬†of a stated ‚Äúreasonable‚ÄĚ time period¬†for which time is of the essence. This¬†reasonable time period should be¬†stated in a written notice along with¬†the statements that the new deadline¬†is ‚Äútime is of the essence‚ÄĚ and that¬†contract will be void if the new¬†deadline is not met exactly. Parties should be referred to legal counsel¬†should they wish to establish a ‚Äútime is of the essence‚ÄĚ deadline after¬†the passing of a non-time is of the essence deadline in this manner.¬†If the seller will not meet the ‚Äúreasonable time‚ÄĚ closing deadline, the¬†buyer should work with legal counsel. Buyer‚Äôs rights may depend upon¬†a variety of technical legal principles such as election of remedies and¬†requirements that buyer demand seller performance and demonstrate¬†buyer‚Äôs intent and ability to close.

Agents are responsible for keeping track of the dates and deadlines for consumers and should be mindful of what needs to occur and by what day. In addition, agents should feel confident on how to determine and calculate when the provision or contingency deadline expires. 

Cori Lamont is Director of Brokerage Regulation and Licensing for the WRA.

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