An unexpected delay in the closing date can be fatal to a real estate transaction. At the very least, after getting everything packed in boxes, it is inconvenient to have to reschedule a move. Even worse: Not being able to close by the date specified in the purchase contract can kill the deal.

Tina & Max had looked at a number of homes, and finally found one which they wanted. It was a modest home with a really nice back yard. There was a brook at the back boundary. They made an offer, and soon had the property under contract. Before committing to deadlines for loan approval date and for closing date, they consulted their lender to be sure that those dates would work. However, as the closing date drew near, despite previous assurances, the loan originator told them that they would need a two week extension. In telling Tina & Max about the delay, the lender acted as though it were no big deal.

But it did turn out to be a big deal. The sellers had intended to “trade up,” which means to sell their home in order to help finance the purchase of a nicer home. But during the time that their home was under contract, the sellers were not able to find a home that they wanted to buy, and they had begun to regret having agreed to sell. So when the delay occurred, it was a relief to the sellers as it gave them a way out. A contract clause in the Vermont Association of Realtors® Purchase & Sale Contract reads as follows: “Neither party shall be obligated to extend the date set for closing. TIME IS OF THE ESSENCE AS TO THE CLOSING DATE.”

The seller’s agreed to return Tina & Max’s deposit, so long as Tina & Max would sign a release terminating the purchase. After being advised by their lawyer that they had no other option, Tina & Max agreed. It was a shock, and a disappointment. However fortune smiled upon them, and they ended up purchasing a home on 3 acres, in a nice location in an area with other kids their children’s age, with a swimming hole nearby. In retrospect, Tina & Max are glad that the first deal did not work out. They were lucky.

If there is a reason to suspect that a delay may develop, as protection, a buyer might insert into the contract a clause requiring an automatic two week extension if such a delay develops. The exact wording should be composed or reviewed by an attorney. The best way to avoid unnecessary delays is to work with a reliable, local lender, and to check regularly to be sure that the appraisal has been scheduled and that the processing is progressing in a timely fashion.