BIC TIP #1268: The 7-Day Grace Period, Then What?

The closing date is a target, not a guarantee. In this BIC TIP, Stephen Long walks through the 7-day grace period built into the standard North Carolina Offer to Purchase and Contract, what happens when that grace period runs out, and the key point many brokers miss: the contract does not die on day eight.

Treat the Closing Date as a Target

The closing date is where everyone wants to close. It may not be the day the transaction actually closes. Lenders, appraisers, title work, and life in general can all push things back.

That is why the contract includes a 7-day grace period. As long as the delaying party is working in good faith to resolve the issue, they will not be in breach of contract during that seven-day window.

After Day Seven: The Contract Is Still Alive

Here is the big misunderstanding. When the grace period ends, the contract does not automatically terminate. It is still a contract.

What changes is that the non-delaying party gains options. In Stephen’s example, if the buyer has failed to perform, the seller is afforded the opportunity to unilaterally terminate the contract. The seller can also choose to keep going. Either way, the contract continues until someone terminates it or the transaction closes.

Amending the Closing Date Resets the Clock

If you have ever used an agreement to amend the contract to change the closing date, pay attention to the grace period language. According to Stephen, the amendment extends the grace period seven days beyond the new closing date, unless the box in that amendment is checked reducing it to only four days.

Read that section carefully every single time. A checked box you did not notice can dramatically change your clients’ leverage and timeline. When in doubt, check with your broker-in-charge.

The Practical Takeaway

Set expectations early that the closing date is a target. Make sure every party has a backup plan in case closing does not happen on time, including moving trucks, lease end dates, and rate locks.

And remember: the grace period is a cushion, not a trapdoor. The contract does not die until someone terminates it or the deal closes.