One of the most confusing features of a real estate purchase agreement are real estate contract dates. Specific dates are seldom identified, other than the date the offer is made and the date it is accepted. From there, dates are commonly specified as “days after” and “days prior.” These dependencies are established because many tasks that take place during escrow can’t start until a prior task is completed. Let’s take a look at how brokers wade through the confusion caused by dependencies in real estate contract dates and close escrow on time.
In the Lethal Weapon movie series, Danny Glover and Mel Gibson performed a recurring bit based on the confusion created by a common predicament: “Do we go on 3, or count to 3 and then go?”
In real estate sales, buyers and sellers often face a similar situation. When a listing agreement or purchase contract says “X days prior…” or “X days after…,” which specific date is the right one?
To answer the question of how a date is determined, let’s start with a definition of “days.” A definition of “Days” can be found in a standard California real estate form, Commercial Property Purchase Agreement and Escrow Instructions (CAR Form CPA), Section 27:
““Days” means calendar days. However, after Acceptance, the last Day for performance of any act required by this Agreement (including Close of Escrow) shall not include any Saturday, Sunday or legal holiday and shall instead be the next Day.”
To understand Days After and Days Prior we need to know when the clock starts ticking. A simple answer is also found in the CAR Form CPA, Section 27:
““Days After” means the specified number of calendar days after the occurrence of the event specified, not counting the calendar date on which the specified event occurs, and ending at 11:59PM on the final day.”
Simply put, if close of escrow is “30 days after acceptance,” acceptance is the specified occurrence and day 1 is the day after the contract was signed.
But what if we need to accomplish something “X days prior…?” By which date does the task have to be completed? We again go to Section 27 of CAR Form CPA:
““Days Prior” means the specified number of calendar days before the occurrence of the event specified, not counting the calendar date on which the specified event is scheduled to occur.”
If we say that the final walk-through inspection must be completed “7 days prior to close of escrow”, close of escrow is our specified event and day 1 is the day before escrow closes.
Since close of escrow relies on completion of tasks performed “days after” and “days prior,” we might need to make adjustments to our escrow closing date several times during the course of the sale if tasks are completed early or late. Experienced brokers can help buyers and sellers navigate these variables.
Translating contract language into specific real estate contract dates on our calendar can be a little confusing, so it’s a good idea for agents to confirm specific dates with escrow as soon as possible after the contract is signed. When possible, buyers and sellers can reduce the confusion by specifying certain “hard dates” in the purchase contract by which certain tasks must be completed.
If you have questions about real estate contract dates or buy/sell/investment strategies, drop me a line at Contact Us!
