In New York, most closing dates are fungible. The contract will typically state that the closing shall occur “on or about” a certain date. New York courts have held that either party can adjourn the closing for a “reasonable period of time.” What constitutes a “reasonable period of time” depends on the facts of the case. For example, a “reasonable period of time” for an all-cash deal may be shorter than a “reasonable period of time” for a deal with a mortgage contingency.
So how should a broker negotiate the closing date if the party who they represent has time limitations? For example, a Seller needs to sell their property in New York before they can close on their property in Connecticut where the closing date is fixed. In some cases, it may be appropriate for the parties to stipulate in the Contract of Sale what the “reasonable period of time” will be in the event that either party requests an adjournment of the closing date. The parties can also get creative by including financial penalties designed to make one party whole if the closing is delayed.
Where the Contract of Sale does not make “time of the essence,” either party may serve a notice making time of the essence if the deal has not closed on or before the closing date in the contract. Based on recent New York decisional law, Time is of the Essence Notice must meet the following three requirements: (1) the notice must provide clear, distinct, and unequivocal notice to that effect, (2) the notice must allow the other party a reasonable time in which to perform his [or her] obligations, and (3) the notice must tell the other party that a failure to perform by the designated date will be considered a default under the terms of the contract. It is important to note that the “time of the essence” standard is not set forth in any statute. Rather, the rules and procedures are established by the courts on a case-by-case basis.
Some people claim that the general rule is that either party can adjourn the closing for up to thirty (30) days. While there may have been cases where thirty (30) days was deemed to be a reasonable period of time, there is no hard and fast rule. As previously stated, the time period depends on the facts of the case.
For questions about residential closings or general information about our firm, please contact us at (914) 338-8050 or send an e-mail to keith@betenskylaw.com. We look forward to hearing from you.
Betensky Law PLLC
118 N. Bedford Road, Suite 302
Mount Kisco, New York 10549
(914) 338-8050
keith@betenskylaw.com
www.betenskylaw.com
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