In our real estate transactions, there is one issue which causes the majority of confusion to our clients. It is the “on or about” closing date, which is the common practice in New York for setting closing dates. Typically, whether we represent a buyer or seller, both sides will agree to a contract that provides for a closing date “on or about” 30-60 days from the date of contract. This means that we will try to have the closing on that date, but neither side is obligated to perform on that date.
The reason why this is a good idea is that setting a closing date one or two months in advance would create problems the parties’ and attorneys’ schedules, and there could be intervening circumstances, like getting an updated certificate of occupancy, that could push the closing back.
The inevitable question we then get is how long until one side can back out of the deal. As with many legal questions, the answer is: it depends. Many attorneys adhere to a rule of closing within 30 days of the “on or about” date is permissible. However, that is not written law and courts have held that shorter or longer timeframes were reasonable under the circumstances. If one party, typically the buyer, refuses to close within a reasonable timeframe after the “on or about” date, then the seller would typically serve a “time of the essence” letter setting the closing for a specific date and time. The buyer must then either close or risk losing the deposit.
Most of our closings happen within 1-2 weeks of the “on or about” date, sometimes before, but usually after. A lot of frustration around closings can be resolved if both parties understand the rules and process for an “on or about” closing date.
PLEASE NOTE that this article is not intended to create an attorney-client relationship and the information within does not substitute for a consultation with an attorney.
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