When it comes to residential real estate transactions in New York, understanding the nuances of closing dates is crucial for both buyers and sellers. One of the most important concepts to grasp is the principle of "time of the essence."

The "On or About" Closing Date

In New York, most residential real estate contracts specify an "on or about" closing date. This seemingly simple phrase carries significant legal implications:

- The specified date is not a firm deadline

- Both parties are entitled to a reasonable adjournment

- Neither party can unilaterally declare the other in default for not closing on the exact date

This flexibility allows for the inevitable delays that often occur in real estate transactions, such as title issues, mortgage approval processes, or scheduling conflicts.

Time is Not of the Essence by Default

New York courts have consistently held that time is not automatically of the essence in real estate contracts. This means that even if a specific closing date is mentioned, it's not considered a hard deadline unless explicitly stated otherwise.

Making Time of the Essence

There are two primary ways to make time of the essence in a New York real estate contract:

1. Explicit Contract Language: The contract can include a clear "time is of the essence" clause.

2. Unilateral Declaration: After the initial closing date has passed, either party can make time of the essence by providing proper notice.

Declaring Time of the Essence

To unilaterally declare time of the essence, a party must:

• Provide clear, distinct, and unequivocal notice

• Set a new closing date that allows reasonable time for performance

• Specify the time, date, and location of the closing

• Inform the other party that failure to perform by the new date will be considered a default

What constitutes a "reasonable" time depends on various factors, including the nature of the contract, the parties' previous conduct, and potential hardships. Generally, a 30-day notice is considered safe and reasonable.

Consequences of Time of the Essence

When time is of the essence, failing to close on the specified date can have serious consequences:

• For Buyers: Risk of losing the down payment

• For Sellers: Potential lawsuit for specific performance or return of the down payment plus expenses

Best Practices

Given the complexities surrounding closing dates and time of the essence declarations, it's crucial to:

1. Carefully review and negotiate contract language regarding closing dates

2. Communicate clearly and promptly about any potential delays

3. Consult with an experienced real estate attorney before making or responding to a time of the essence declaration

Conclusion

Understanding the intricacies of closing dates and time of the essence provisions is essential for navigating New York's residential real estate market. Whether you're a buyer or seller, working with a knowledgeable real estate attorney can help ensure your interests are protected throughout the transaction process.

By grasping these concepts, you'll be better equipped to handle the challenges that often arise in New York real estate deals, from unexpected delays to strategic negotiations around closing dates.