A typical real estate transaction is complicated and has many moving parts. In plainest terms, many parties have to come together, ready and willing to move forward at one time, for a real estate transaction to close. Nearly every aspect of real estate transactions has increased in complexity, and despite advances in technology, delays are still common.
When a delay arises, one of the first questions asked is: “What are my rights?” Some may wonder if a delay is a breach of the contract. More often than not, a delay is not necessarily a breach of the contract, or if it is, it is a breach that can be remedied and excused through prompt action by the delaying party. This situation can easily trigger an emotional response, and the first thought might be how to penalize the offending party, but in most cases, what happens next is determined by the terms of the sales contract.
The party wronged by the delay might take no solace in the fact that many contracts provide for an opportunity to cure the delay within a specified time period. For example, the North Carolina “standard” residential sales contract (Form 2-T) allows for a delay period that extends for up to fourteen (14) days beyond the agreed settlement date without penalty to the delaying party, provided they are acting in good faith to close the transaction. South Carolina’s contract allows buyer and seller to agree on an extension period at the time the contract is signed. Other contracts may contain different provisions, so a careful reading of the contract would be required to determine what a non-delaying party may do with respect to the delaying party.
Delays which are not cured, or for which the contract does not provide for a cure period, must be addressed through the available legal channels described in the contract. As with the above, this will require a careful reading of the contract. In some cases, the contract provides for the forfeiture or return of earnest monies and the termination of the agreement as the sole remedy. In other cases, a non-delaying party may have the right to sue for actual damages or enforce the contract through a specific performance action (in other words, force the completion of the contract terms by court order).
A closing delay is an ever-present possibility. The best advice to ease the stress of the delays is to be reasonable in your expectations, never promise more than you can deliver, always have an alternate plan (or two) in place in case things do not work out, and maintain open and candid communications about the transaction with all involved. Arriving at closing with the moving van packed is an invitation for things to go poorly. If your closing is delayed, the first thing to review is your contract. If this raises more questions than it answers or you are simply not sure, an attorney at Black, Slaughter & Black can help guide you through the situation and understand your rights and obligations.