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eal estate transaction agreements oen provide a deadline for something to
be done, for example a time by which a property buyer must pay the purchase
monies to the seller. ey also oen state that time is of the essence.
When "time is of the essence," it does not mean that the person must
merely do their best to meet the deadline; it means that if the person fails to meet the
deadline, the other party has the right to terminate the agreement.
e termination of the agreement can cause losses to one or more of the
contracting parties. It can also expose the person who caused the party to miss
the deadline (such as a mortgage broker who did not appropriately forward
documents to a lender, or a lender who did not fund in accordance with
the loan agreement) to being held liable for the losses.
SomE GEnErAL PrInCIPLES
e general rule is that time is not of the essence unless the
agreement makes it so or it can be implied as being so from the
circumstances.
Courts are reluctant to imply from circumstances that time
was of the essence. Generally, there is no need to ask them to
do so in real estate matters as real estate agreements most oen
explicitly state that time is of the essence.
A party can waive time's being of the essence for the other
party by agreement or by their conduct (such as by having
previously accepted late payments). Aer a party has waived
time's being of the essence, the party can again make it of the
essence by giving reasonable notice to the other party.
To enforce time having been of the essence, the wronged party
must have been ready, willing and able to perform its own obligations.
If neither party is ready, willing and able to perform by the deadline,
the "time is of the essence" requirement ceases to apply. However, as with
When
"Time Is of the
Essence"
use of the phrase
can elevate the related
obligation to a level of
do-or-die
By rAy BAsi, l.l.B., stAff,
eDucAtion AnD Policy review
