BIC TIP #1146: Closing Day Has Passed

The settlement date on the contract has come and gone. The grace period has passed too. So the deal is dead, right? Not so fast. Stephen Long reminds brokers that a contract does not automatically terminate just because the closing date has passed. Under the Offer to Purchase and Contract, the parties are still in contract until one of them terminates.

Missed Dates Do Not Self-Destruct

Many brokers and consumers assume that once the settlement date and the grace period are behind them, the contract simply evaporates. Stephen is clear that this is not how it works. Even after the closing date and the grace period, the ability to enforce the contract is still in play.

The contract stays alive until one of the parties sends a termination. That termination is what makes the contract go away and starts the process of releasing the earnest money.

Why This Matters

If everyone assumes the deal is over, the seller might start entertaining new offers or the buyer might walk away from financing, while legally the original contract is still standing. That is a recipe for disputes, confusion, and possibly two buyers claiming the same house.

Knowing that the contract continues until someone acts helps you give accurate guidance to your clients instead of assumptions.

Talk to an Attorney Before You Pull the Trigger

When a closing has slipped, the temptation is to fire off a termination and move on. Stephen recommends caution. Before anyone goes about unilaterally terminating, it may be wise to talk to a real estate attorney to be sure your client is in the green.

Which party is in default, who is entitled to the earnest money, and what the consequences of a termination may be are legal questions. Brokers should not be making those calls for their clients.

The Practical Takeaway

Passing the settlement date, even beyond the grace period, does not end the contract by itself. It remains enforceable until a party terminates. Keep your dates on the radar, work hard to hit your closing date, and if you are going to miss it, have a plan. Before anyone terminates, consider having your client consult a real estate attorney.