Plan for deadlines when drafting your real estate contract.
Whether you are a buyer or a seller, understanding the deadlines in your real estate contract and how to use them increases the likelihood of having a successful transaction. Also, by focusing on matters you control, it decreases the amount of stress involved in buying and selling real estate.
Why deadlines in real estate contracts are important.
Missing a deadline in a real estate contract can mean losing control of your contingency rights and putting the other party in the driver’s seat where they can decide whether to move forward with the transaction or not. It can also expose you to legal liability and automatically make the contract null and void. If that sounds like a bad day to you, read on for a better strategy.
Proper Planning Prevents Poor Performance
Being ready to set deadlines and use them effectively starts well before you sign a real estate contract. Trying to understand these issues right before you submit an offer or on the eve of a deadline is difficult and stressful. Being prepared is a straightforward process and can be broken down into the following steps.
#1. Identify the standard deadlines that are likely to apply to your real estate contract.
Since many real estate contracts (also called an “offer to purchase”) either use standard forms or otherwise follow a similar layout, this is not as hard as it seems. Identify the contract form that is likely to be used and read it.
Tip. The Wisconsin Realtors Association provides real estate forms to many brokers and attorneys and is a good place to start researching which forms you might want to use.
#2. Identify any optional deadlines you want to apply to your real estate contract.
The parties are free to add optional deadlines to their real estate contracts. Often these deadlines relate to contingencies. Contingencies are contract terms that give the parties various options depending on facts and circumstances that come to light after the real estate contract is signed.
Download a Summary of Deadlines in the WRA Form WB-14.
Use the attached summary to identify and develop your own deadlines checklist. Doing this in advance of preparing your real estate contract puts you in the driver’s seat when it comes to negotiating and managing the deadlines in your real estate contract.
#3. Determine what options come with each deadline and what you can do to control that outcome.
Some deadlines in real estate contracts are very simple. If they are not met, the party missing the deadline is in default and the default rules apply. Other deadlines, usually related to contingencies, are more complicated and come with various consequences. Often, they give the parties options. The deadlines are the date by which you need to exercise those options. The option you select dictates what options the other party has for its response. It’s a game of chess.
Tip. Keep in mind, you can change the rules of the game. Neither party is obligated to use the template contract language that comes on standard real estate contract forms. If it doesn’t serve your needs negotiate revisions to the language.
#4. Determine your preferred timeframes for each deadline.
Many deadlines in real estate contracts are not expressed as a date, but rather as a certain number of days from the occurrence of an event. Usually, it is in the best interest of both parties to set these deadlines so that each party has a reasonable amount of time to meet each deadline. If you are relying on a third party in order to meet a deadline, it is important to consider the how fast they will be able to act when setting deadlines.
Tip. After you sign your real estate contract make your life a little easier. Create a summary of your deadlines and what options apply to each so they will be easy to remember and manage. Using an on-line tool like www.timeanddate makes it easy to calculate your deadlines.
Getting help with your real estate contract.
Getting help does not need to be expensive. If you ask for advice limited to a specific issue many attorneys can provide reliable and economic estimates or fixed pricing. Be specific in your request and you will get the help you need.