The Agreement of Sale of Real Estate (AoS) here in Pennsylvania is made up of 3 negotiable components: Price, Terms, and Time. This week, we’ll be exploring the time components within this agreement. Nearly every section of the AoS includes a stated timeline, and any addenda or additional contingencies should, as well. Even addenda submitted after the Execution Date should have “drop-dead” dates for the other party’s response.
We’ll start off by covering some recurring concepts then go through some examples. I’ll be taking questions at the end. Join me as I sketch an overview of timelines and deadlines during a real estate transaction!
Congratulations, the offer we submitted has been accepted! That last required signature is on the AoS, the contract is considered executed, and the timelines begin. From here on out, any changes to any timelines need to be in writing and signed off by all parties, though the Execution Date is set in stone. Verbal or implied extensions don’t change the deadlines. Since the idea of “Business Days” is not a part of an AoS in Pennsylvania, we’ll want to have gone through the contract and made sure all the dates are realistic and achievable before submitting your offer. Otherwise, the default timelines take effect.
Missing any of the deadlines could prove problematic. If the seller misses any deadlines, there’s a chance we could back out of the transaction without defaulting. Unless there’s really a problem from the seller’s end, I usually suggest moving forward with negotiations. After all, you probably want that house still.
If you miss a deadline as a buyer, things are a bit more complicated. What deadline was missed, and what was it about? Many contingencies include terms that you accept the findings and move forward with the purchase, should their deadlines be missed. Others have terms that disqualify a buyer if they miss a deadline.
So, missing a contingency’s deadline could lock you into the purchase and remove the seller’s responsibility around that contingency. Missing any other deadlines as a buyer could usually lead to a default. Deposit money could be forfeit and the purchase lost. The seller can usually opt for negotiations, but it’s best to be on time.
With the clock now ticking, we count “days after execution” and “days before settlement” as our major touchpoints. Some timelines will follow a certain number of days after execution, while others will be based on their stated number of days before settlement. Other deadlines are negotiated and not based on the Execution Date or Settlement Date. With so many different timelines and deadlines to follow between the execution and settlement dates, being organized goes far.
One of the first deadlines that comes after the execution of the AoS is to get the deposit money in. Unless you’ve noted otherwise, you have 5 days to get the deposit money in. As a deadline that is not part of a contingency, this is one that could jeopardize your chance of winning the home. Having your ducks in a row before submitting your offer should help with this quick timeline.
Some timelines start counting back from settlement, like the deadline to get your mortgage rate locked. Most mortgage companies require the rate be locked more than 15 days prior to settlement. While this might be negotiable, you’ll have to talk with your mortgage provider to find out more.
Timelines and deadlines for standard contingencies in the AoS are complicated enough that they get their own section. While all timelines can be negotiated, and should be cross-referenced with a calendar for feasibility, let’s use the default timelines for this explanation.
By default, there are:
- a contingency period of 10 days after execution,
- followed by a negotiation period of 5 days after the end of the contingency period,
- followed by a “take it or leave it" period of 2 days after the end of the negotiation period.
This means, from time of settlement you have:
- 10 days to schedule, perform, and get the results of any inspections to the sellers,
- 15 days to end negotiations, and
- 17 days to fully decide.
Compared to the deposit money deadline and mortgage rate lock deadline, contingency deadlines can be especially confusing for agents and consumers alike. The three timelines all appear in the same section, but not in the same actual block of text. Then there’s the matter of counting based on the end of the prior period. I find it’s important to remember these timelines set “last date to accomplish” deadlines. Accomplishing the tasks doesn’t end the period and move on to the next one – the period lasts the stated number of days.
There is one additional deadline worth pointing out. Any tests, paperwork, or other information that the sale is contingent on needs to be available for consideration before settlement. If test results or HOA details are not back by the time settlement is made, it’s already too late and something has gone wrong. An extension can be requested before then, but once the transaction is completed, you’re out of time to consider going through with it vs withdrawing safely or exercising your right of recission.
I know your time is important and thank you greatly for spending some of yours with me on this overview of timelines and deadlines in the Agreement of Sale of Real Estate here in Pennsylvania. Did you know these deadlines are negotiable, or learn something else? Please let me know what you found surprising!
As always, I hope to provide you with information that is relevant and interesting. Do you have any questions about the world of real estate in the greater Chester County area? I’m here for you. Reach out; let’s chat!
