Computing time lines in your real estate contract
With Thanksgiving coming up, its a good time to review the terms of local real estate contracts as they relate to dates… at least those pre-packaged purchase and sales contracts provided by the Northwest MLS or the Commercial Brokers’ Association. Clients and even agents can be confused calculating due dates and deadlines. But, its actually not that hard.
You just need to know the following information:
- Which days are considered holidays
- Is the timeline 5 days or less, or more than 5 days?
- The start date you are calculating from
What holidays count for real estate contracts?
Check the official holidays in your state (http://dor.wa.gov/content/contactus/localoffices/con_hldy.aspx) and the federal holidays (http://www.opm.gov/policy-data-oversight/snow-dismissal-procedures/federal-holidays/#url=2013). The combined list counts. Washington state’s holidays are pretty much the same as the federal ones, but we also have an extra day for Thanksgiving.
Why does it matter if the timeline is 5 days or 6 days?
In the local CBA and NWMLS contracts, if a timeline is set to be 5 days or less, then the timeline does not count weekends or holidays. So, if you are calculating from Monday, and the timeframe is 5 days, then it ends on the following Monday (from this Monday, count days… Tuesday is 1, Wednesday is 2, Thursday is 3, Friday is 4, don’t count the weekend, so Monday is 5). If Monday is a holiday, the day 5 is Tuesday.
Or, to put it in context of Thanksgiving. If you get ‘signed around’ on Monday (the 25th), and you have a 5-day time limit to finish something, then your deadline ends on the Wednesday (the 4th), because we don’t count Thursday or Friday (holidays) or the weekend.
OK, what about time-frames longer than 5 days? Per the contracts, the timeline includes the weekend. Lets look at a 7 day period, because it causes something interesting to happen. If your time-frame starts on Monday, the 7 day period ends on Monday (just like the 5 day period did).
Lets calculate it: From Monday, count days… Tuesday is 1, Wednesday is 2, Thursday is 3, Friday is 4, Saturday is 5, Sunday is 6, and Monday is 7. So in this scenario, 5 days and 7 days are equal.
What happens with a holiday like Thanksgiving? In that case, if we start this Monday, the 25th, the end date is still next Monday, the 2nd, because we still count those days when the time period is more than 5 days. So, oddly enough, you actually have LESS time with a 7 day period than you would with 5 days!
What is my start date?
Most dates are calculated from “mutual acceptance”. As a general rule, mutual acceptance (MA) is defined as the day when everyone is in agreement and has signed the same version of the contract. Generally, this is the date of the last signature on the contract. (We can’t have agreement until everyone has signed.) Your timeline starts from that day, but does not count that day. So, if your Mutual Acceptance date is Monday the 25th, a 1-day timeline would end on Tuesday the 26th.
There are exceptions to the mutual acceptance definition, but those will be spelled out by your contract. The most common in recent years has been in the case of short sales, where the mutual acceptance date will often be defined (at least for some portions of the contract) as the day the seller accepts their lenders’ terms for approving the short sale.
Also, there are many timelines that start after some other occurrence… for example, deadlines for reviewing and approving the title report start once it has been received, if that option is chosen.
Are you still confused?
OK. We are used to these calculations. So, perhaps it is confusing for people who don’t deal with it all the time. If you have questions, just let us know and we’ll try and help. If you have an agent you are working with already, please ask them for help first, though.