Acceptance Periods Can Be Deal Killers in Real Estate Contracts
An Acceptance Period in a real estate contract is just what it sounds like – a specified time period in which a buyer can accept the contract offered by the seller or decide not to accept it. Interestingly, this very simplistic clause in a real estate Purchase and Sale Contract is very powerful and can be used by the seller to kill a deal that a buyer thought he had locked up.
Let’s use an example for clarity. Assume that the Seller’s listing agent writes a contract and sends it to you as the Buyer. The clause for the time for acceptance simply says that the Buyer must accept the contract in two days, for this example, or the Contract is null and void.
The first problem with this scenario is you shouldn’t allow someone else to write the contract. You should be familiar enough with contracts in your state to write them yourself. If you are uncomfortable doing this, have an attorney do it for you. Your personal power is in controlling your deals and contracting is the most important aspect of closing deals.
In the above example, the next item that stands out is the two-day acceptance period. Unless otherwise stated in the contract, all “days” are calendar days and NOT business days. If you didn’t know this, you might get the contract late Friday and think you had until Tuesday to sign and return it because you are assuming weekends don’t count.
On Tuesday you send in the signed contract and the listing agent calls and says there is another Buyer and your contract has been cancelled by the Seller. You even may have resold the property already and that would put you in a pickle. You complain that you had two days and you are in time, but the agent knows better and your deal is lost.
However, if the seller signed and initialed your contract before he sent it to you, then with just your signature, you have a valid contract assuming you comply with the terms for the earnest money deposit (EMD) and returning the contract to the seller within the Acceptance Period.
If you are a BUYER and doing your own contract writing, you should consider including a clause that stipulates that any days referred to in the contract are specifically business days and not calendar days. This clause will give you two extra days for each weekend and all holidays where banks close.
If you are the SELLER, you have a different frame of mind about the contract and you’ll want no clause about business days.
The Acceptance Period is only one of many clauses in contracts that can greatly help or hinder your getting and selling a property. We will cover more of the other critical clauses and their aspects in future Insights.
To your limitless success,
The information contained in this and my other articles is not to be construed as legal or accounting advice. Always seek the advice of licensed professionals for answers to your legal or accounting questions.