The blog entry is a little difficult to write, because the topic makes laymen cringe, and think that lawyers deal in a parallel reality. But our job is not to justify why Courts and lawyers look at issues a certain way, but to simply report “as it is.”
The proposition of law we share today is:
We don’t actually mean the deadlines set forth in contracts unless we use the magic words “Time is of the essence.”
Mays v. Hartman, 81 Ohio App. 40877 N.E.2d 93 (1st Dist, 1947).
Let’s re-visit that proposition again. When a contract sets forth dates for the performance of obligations of parties to the contract, we don’t mean those dates — but rather “on or about those dates” — unless the contract expressly states, using these magic words, that “time is of the essence.”
So, extending this principle to both residential and commercial real estate contracts, if we say the seller will close on June 30, we mean “on a date reasonably close to June 30.” If we say that a buyer has 90 days to complete his due diligence inspections of real estate, we mean “a date roughly in proximity to 90 days from contract signing.”
Now, as to the standard Cincinnati Area Board of Realtors purchase contract form in general use for residential transactions in the greater Cincinnati marketplace today (read your own form to be sure), time is NOT generally of the essence, as to closing date and certain other deadlines, but it IS of the essence as to (i) the inspection contingency deadline (Section 13) and (ii) surrender of possession of the real estate (Section 20).
Contrary to much of contract law, which generally applies a practical common sense interpretation to contract language, as to deadlines in contracts, “time is not of the essence,” unless the contract expressly says it is.
These words, “time is of the essence,” are some of the few “magic words” to which courts give special meaning.