Q: Is there any clause that can force the seller to pay damages if he fails to close on the agreed date without any prior notification? My closing was supposed to be on a particular date. But when I requested confirmation, the seller didn’t respond. I was waiting for any reply. The seller’s attorney didn’t even pick up the phone calls from my lender or title agency.

After seven days, my attorney sent documents to the seller. The seller did respond seven days after that when I said that I was going to close the deal if he didn’t respond by the next day.

Q: Is there any clause that can force the seller to pay damages if he fails to close on the agreed date without any prior notification? My closing was supposed to be on a particular date. But when I requested confirmation, the seller didn’t respond. I was waiting for any reply. The seller’s attorney didn’t even pick up the phone calls from my lender or title agency.

After seven days, my attorney sent documents to the seller. The seller did respond seven days after that when I said that I was going to close the deal if he didn’t respond by the next day.

After 14 days of stress and mental harassment, the seller agreed to close on a date 14 days after the closing date in the contract! He didn’t respond to any of the mail I sent him through the entire transaction, including a letter explaining the damages he was causing me. Is there anything I can do against him? –Harassed buyer, New Jersey

A: I don’t know what the New Jersey state real estate contract form says, but it’s highly unlikely that it contains a clause under which you could hold the seller liable for closing two weeks late. The reality is that a close of escrow date that is specified in a real estate contract is generally thought of as an approximate date, despite the fact that most real estate sales contracts specify that "time is of the essence."

As long as both parties still want to close escrow at the time both are ready, willing and able to do so, and so long as the transaction does actually close escrow, it’s doubtful that there’s anything in the contract that would award damages to the buyer for a two-week-late close.

Now to the inevitable exceptions. If you and the seller agreed — even now — that he would pay a late fee for closing beyond the revised close of escrow (COE) date, that would be different.

And, in fact, on most sales of foreclosed homes, or REO properties (bank-owned, also known as "real estate-owned"), the bank/seller actually puts a clause in the sale contract up front that mandates that the buyer will be liable for a per diem (per day) late fee in the range of $100 for every day the buyer is late closing.

The clause is not reciprocal, and does not apply to the bank/seller in the event the transaction does not close on time.

(Of course, in the vast majority of real estate sales, a late close is due to a buyer’s delays, not delays on the seller’s end.) Even in REO transactions, the bank doesn’t generally enforce the late-fee clause for a tardy close of a few days or less — it’s often enforced only after a long delay in closing.

If time truly, truly was of the essence to the point that you would experience significant damages from a two-week delay in closing, the time to negotiate a damages clause for a late close of escrow would have been when you negotiated the original purchase contract.

That would both have secured your rights to some sort of penalty/compensation for a delay and, even better, would have given a major boost to the chances that the seller would have put much more effort into an on-time close.

Of course, the seller might not have been willing to agree to such a term. In any event, the 100 percent surefire way to protect your interests up front would have been to ask your agent or attorney how precise the contract closing date was, and build as much flexibility into your moving plans as possible to avoid experiencing any damages from a late close of escrow.

I have advised many a homebuyer to delay giving their landlord a 30-day notice as long as possible, because close of escrow dates are slippery on today’s market, more than ever.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×