Timing in a conveyancing matter is critical for various reasons…
In Queensland a contract to buy or sell a property can and is mostly made conditional upon various satisfactory outcomes within specific time frames.
If unsatisfactory outcomes occur within the specific time frames, the relevant party may be able to terminate the agreement and walk away without penalty.
Conditions which may apply are usually
· Finance conditions
· Building and Pest conditions
· Due Diligence conditions
· When buying a strata unit – satisfactory Body Corporate reports
· When buying and selling simultaneously… subject to the sale of the Buyer’s property and simultaneous settlements
· And many more…
Once a contract is signed by all parties and dated the Buyer essentially secured the property for him / her / them for a period of time, meaning the Seller cannot entertain any other Buyer or their offers.
Generally, the Buyer must then do what they need to do to satisfy those conditions within the stipulated time frames. If the Buyer confirms satisfactory outcomes to the Seller prior to the specific time frames allowed for in the contract, the contract becomes unconditional and the Seller is bound to complete.
Should the Buyer not satisfy the conditions prior to the time frames stipulated in the contract, or obtain extension of the time frames from the Seller, the Buyer looses the opportunity for the contract to automatically become unconditional and bind the Seller to complete.
The phrase “time is of the essence” comes into play here.
“Time is of the essence” is a contractual term which requires timely completion of a task. If timely completion of the task does not occur, the other party to the contract will have rights against the defaulting party.
This essentially means if a party does not do what they were supposed to do by the due date in the contract, then the other party becomes entitled to terminate the contract.
In some situations, the defaulting party may be liable to the other party for costs and compensation.
The fact that there may have been delays outside the defaulting party’s control is not considered when time remains of the essence.
Should you enter a contract in which time is of the essence, you must ensure that an adequate time frame is negotiated to allow you to perform your contractual obligations. You also need to attend to these obligations promptly.