Is contract at risk??

Question

Hi fellow BPers!

I have an interesting question about Purchase/Sale agreement dates.

I have my home for sale and the buyer (electronically) signed the agreement on April 15th and then sent it to me.  I ALSO signed it on April 15th.   They signed it first on the 15th and then I signed it -- same day.  My agent sent the buyers agent a copy on the 16th (following day).

In the meantime, a previous party has expressed interest in the property and upped their offer enough to get my attention.

Here's where it gets interesting.  According to my contract, "Buyer shall have 10 calendar days after the date of acceptance of the contract by both parties to have inspections, environmental inspections, and/or tests completed."

The buyer has scheduled to have the inspection on April 26th.

I told my agent that I thought that the buyer is missing the inspection date by one day.  She tells me that because she didn't get the agreement back over to the buyer until the following day, that they would have until April 26th.  Since both myself and the buyer had signed it on the 15th, it didn't seem to matter as to when she delivered it to them.    On the other hand, if she took 7 days to notify/deliver it to the buyer, it would not have been fair to them to only have 3 days to have the inspection.  Possibly it's a matter of both parties KNOWING that the agreement has been signed?

Interested in anyone that might have experience with this.

Thanks,

Dave

Wayne Brooks · Answer

Amazing what you can learn, when you read the contract you signed  :)

Sam Leon · Answer

So true.

I remember there was a time when Fannie Mae contracts went by an "Acknowledgement Date".  I signed their REO addendum, but Fannie Mae never sent back the fully executed contract.  Meanwhile we were still in price negotiation, as well as going back and forth on the closing date (they wanted 15 days I wanted 30).  Finally on day 7 after they countered we agreed to terms verbally.  That's when I decided to go through the contract and addendum one last time and caught the term "Acknowledgement Date".  I emailed my RE attorney and buyer agent to asked to make sure that's the same as our "Effective Date", both said yes.  But something bothered me as to the language so I asked my agent to check with the listing agent and the reply came back saying the A.D. is not the same as E.D. and the clock started ticking the day Fannie Mae verbally acknowledged my offer with a counter to my price, therefore I had 10 days from that day to complete my inspection.  I was already on day 7!  That was a close one because had I not ask I could easily have waived my inspection contingency unknowingly.

Jesse T. · Answer

Would the second party be willing to submit a back-up contract?  You need to attempt to execute the contract you agreed to in good faith, however if things go wrong - it would be great to have a back-up option.

Dave Myers · Answer

Thanks all for the comments and feedback.  This is a such a great site :)

I reviewed my contract again and there's another section which describes, among other things, that the contract is active on the "date it is delivered to the offerer".   So, although there is a signed date, the contract starts when it's actually delivered (via snail mail, fax, email, or hand delivered) to the offerer.

Thanks again all for the great input.

-Dave

Guy Gimenez · Answer

@Dave Myers

Contract law is often very state specific.

In Texas, a contract is effective when notice is given (to the "other" party) of acceptance of all terms by the last party to accept.

Sam Leon · Answer

It's all based on the date of delivery.  How was the copy sent to the buyer?  If it's emailed or faxed than it's 4/16 if it's mailed it's when they took delivery.

Also April 26 seems to be a Sunday are you sure they have an inspection scheduled for that day?  If it's done on that day, my experience is most times the inspection report doesn't come back till the next day, and if it include pest control, mold inspection etc...those respective reports take even longer, although the buyer if present during the inspection would most likely know all the big items on that day.

Jon Holdman · Answer

I've been in this situation as a buyer, and the seller ABSOLUTELY went off what the contract said.  The contract said I had seven days for inspections from MEC.  That means "mutually executed contract" which mean the later of the two dates when we signed.  They signed on a Friday, I found out about their acceptance on Monday and was still held to the seven day time limit.

What does your contact say?

Realize that time limit usually doesn't just mean having the inspections done.  It also means that any requests they have for you have to be brought to your attention.  If they're doing the inspection on the last day of the contingency period, they will need to give you any objections that same day.

Wayne Brooks · Answer

No, it's quite clear.  The inspection period starts upon Notification/Delivery of the acceptance. "Knowing", perhaps through telepathy, doesn't count.   As you said wouldn't make sense if you sat on it for 9 days.

Is contract at risk??

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