Why State "Time Is of the Essence?"
April 29, 2002
Tara A. Scanlon- Washington
The boilerplate in most real property leases and contracts of sale or purchase
states that "time is of the essence." This phrase may seem redundant when the
lease or other contract contains specific deadlines for when the parties have to
perform certain obligations, and sets forth an outside date for performance.
However, this simple clause is "magic language" without which courts in certain
states will not strictly enforce deadlines in a lease or a contract for the sale
of real property, and will infer that obligations such as the obligation to
close may be performed within a reasonable period of time, using the stated
deadlines merely as guidelines rather than absolute commitments.
For example, in Wendell W. Wood v. Elva W. Wood, individually and as
executrix, etc., 216 Va. 922; 224 S.E. 2d 159 Supreme Court of Virginia, the
court held that "Equity has established the rule that in contracts for the sale
of real estate, time is not of the essence unless expressly stipulated in the
agreement, or it necessarily follows from the conduct of the parties or the
nature of the circumstances of the agreement."
Sims v. Nidiffer, 203 Va. 749, 752, 127 S.E. 2d 85, 87 (1962). The intention of the parties, as
demonstrated by their words and acts is a controlling factor. And, the
intention to make time essential will not be inferred from the mere appointment
of a date for delivery of the deed or payment of the purchase price.
Morris v. Harrop, 152 Va. 127, [***7], 135, 152 S.E. 343, 345 (1930).
One may not always rely on deadlines in a lease or contract for the sale of real
property without the simple phrase "time is of the essence as to the obligations
of the parties under this agreement." Heavily negotiated, clearly articulated
and mutually agreed upon deadlines can be nullified, despite the best intent of
the parties during the negotiation process, without this simple but essential
language.
For more information, contact Tara A. Scanlon at 888-688-8500
or via e-mail at tscanlon@hklaw.com.