Paying Attention to Real Estate Contract Deadlines

As an attorney, I have dealt with Texas real estate purchase-sale contracts on numerous occasions—and in particular the TREC-promulgated real estate contracts. In dealing with brokers, real estate agents, buyers and sellers, I have come to the conclusion there is a need on all levels for a greater awareness of the various deadlines and responsibilities placed on each party.

Filling in the many deadline blanks in the TREC contract serves a more important function that just completing the contract. Each deadline is there to allow the buyer ample time to complete the complex due diligence of the property or show the seller that they have a firm buyer. First off, an agent should take due care to make sure the deadlines can be fulfilled realistically. Secondly, because of the busy schedules of the real estate professionals involved in the purchase and sale of real estate, it is easy to miss these deadlines, which could subject an agent to litigation risk should the transaction go bad.

A real estate contract should be read not only for the price, terms and conditions, but also for the critical dates. For example:

• Declaration of Bylaws and Rules of the Association (for condos or PUDs) should be delivered to the buyer by the seller in 20 days of the execution of the contract otherwise; the buyer can cancel the contract. Once the buyer receives the bylaws and rules of the association, the buyer has 6 days to object.
• The same goes for the Resale Certificate which cannot be older than three months. If the buyer objects within the timeframe given, the buyer can cancel and receive refund of earnest money.
• Commitment for Title Insurance is to be delivered to the buyer no later than 20 days along with documents evidencing restrictive covenants or exceptions to policy. If the title commitment is not delivered within 20 days, the contract extends 15 days or until the time of closing, whichever is earlier. Once the commitment is delivered, the buyer has 10 days or until the date of closing, whichever is earlier to make any title objections. If any objections are made, the Seller has 15 days to respond. If the title objections are not cured within 15 days, the buyer can cancel the contract and the earnest money will be refunded.
• From the time an Option Fee is paid the buyer has 10 days to review the contract and if the buyer decides to cancel, the buyer’s earnest money will be refunded, but not the option fee.
• It is customary that Third Party Financing Addendum normally states the buyer must obtain financing within 20 days (although since loan underwriting can take longer, it might be advisable for the buyer to negotiate for more days). Thus, if the buyer can not secure financing in 20 days, then the buyer can cancel and have his earnest money refunded.

These are just a few of the timelines to be aware of. Of course, the parties can always alter the amount of days listed above if agreed to by all parties.

At Griffin Law Firm, because this is such an important aspect of accomplishing the close of a transaction, we assist our real estate clients in keeping up with these deadlines throughout the purchase-sale process.