fbpx

Counting Contract Dates: The Advanced Training Course

Business days, calendar days, holidays? Deposits, inspections, repairs and automatic closing extensions? Contract timelines can still confuse members. Here are some of the top questions posed to Florida Realtors Legal Hotline.

ORLANDO, Fla. – Florida Realtors Legal Hotline has weathered extreme seller’s markets, buyer’s markets, and even distressed property markets. The types of calls we hear vary quite a bit as these seasons change. However, there is one constant, regular conversation that never changes – counting dates to calculate contractual deadlines.

We previously ran an introduction to date counting titled Days-ed and Confused: Time Provisions in FAR/BAR Contracts. That was a nice 101-level introduction and overview to the topic. This time, we’re going to dive a little deeper into a 201-level discussion of date counting, still using the Florida Realtors/Florida Bar Residential Contract for Sale and Purchase and the As Is version (rev. April 2017).

While the last article covered the basics of counting time, this gets into some of the more common spots where people fumble in figuring out deadlines.

  1. Deposit Deadline. One common mistake is parroting lines other people have said, like, “You always use business days to calculate escrow delivery,” instead of locating the source of the rule and reading it carefully. Take that phrase, for example. If you’re talking about the Florida Real Estate Commission’s (FREC) escrow handling rules at Florida Administrative Code 61J2-14, you’d be correct. Sales associates must deliver any deposits received to their broker or employer no later than the next business day following receipt. Brokers, meanwhile, must place the deposit in an escrow account no later than the third business day after the broker or associate receives the deposit.

    However, when it comes to a buyer’s deadline to make a deposit under a Florida Realtors/Florida Bar contract, calendar days are used. Section 18, Standard F provides “Calendar days shall be used in computing time periods.” There is no reference to business days in these contracts, although there can be an automatic extension if a deadline or date ends on a weekend or holiday, as Standard F continues: “Other than time for acceptance and Effective Date … any time periods provided for or dates specified in this Contract … which shall end or occur on a Saturday, Sunday, or a national legal holiday … shall extend to 5:00 p.m. (where the property is located) of the next business day.” Therefore, any buyer who has a contract with an effective date of Friday should take care to ensure the deposit is delivered to the escrow agent no later than Monday.

  2. CFPB Requirement Extension. Another phrase we’ve heard goes something like, “The buyer’s lender says they have an automatic extension of up to 10 days if they need more time to close.” However, here’s how Section 5(a) is worded: “If Paragraph 8(b) is checked and Closing funds from Buyer’s lender(s) are not available on Closing Date due to Consumer Financial Protection Bureau Closing Disclosure delivery requirements (CFPB Requirements), then Closing Date shall be extended for such period necessary to satisfy CFPB Requirements, provided such period shall not exceed 10 days.” Did you spot the key words? The delay in funds must be due to Closing Disclosure (referred to as the CD, formerly called the HUD-1) delivery requirements. This refers to a specific three business-day waiting period mandated by the CFPB, not any lender delay whatsoever. 
  3. Inspection and Repair Multiple Timelines. One final phrase we hear when people talk about the Florida Realtors/Florida Bar contract (the inspection and repair version, NOT the as-is version) is, “So, can the buyer cancel if the seller doesn’t want to make the repairs?” This question overlooks the multiple timelines in play, some of which don’t begin until one side or the other sends a written notice. When there are multiple clocks for situations like these, it may help to sketch them out. If not, the parties should keep going back to the contract to make sure everyone orients on where they are in the process.
     
    • First, the buyer has the option to deliver a written notice of items the seller must remedy within the inspection period. The default timeframe in Section 12 is 15 days after the effective date, although the parties can negotiate a different deadline by putting a number in the box.

      If the buyer delivers a written notice of general repair items, the date the seller receives that notice starts a second clock. Section 12(b)(iii) provides that the seller will have 10 days to deliver an appropriately licensed person’s estimate of what it would cost to make the repairs. There’s a second option where the seller can hire their own inspector to counter the buyer’s inspection report, although since it’s infrequently used, we’ll drop to the third common time window.

    • Once a seller delivers the written estimate of repairs, a third clock starts if the estimate exceeds the repair limit in the contract. Both the buyer and seller will have 5 days to write to the other side. The buyer can (if they want) inform the seller they’ll just ask for some of the repairs in order to keep the cost under the repair limit. Simultaneously, the seller can (if they want) inform the buyer that they’ll fix all the repairs, despite the fact that costs are over the repair limit.
       
    • If neither the buyer nor the seller sends a written message during that 5-day window, then in the final phase, either party can terminate the contract, enabling the buyer to receive a return of the deposit. As you can see, there are quite a few formal steps to get to this final cancellation phase.

Joel Maxson is Associate General Counsel for Florida Realtors

© 2021 Florida Realtors®

http://feedproxy.google.com/~r/floridarealtors/~3/l6IABkmNi9M/counting-contract-dates-advanced-training-course