Most state courts, including the Nevada Supreme Court, recognize and enforce the integrity of “time of the essence” clauses. The Nevada Supreme Court recognizes that, under common law, a delivery of money, which a party is required to pay at a specified time and place, must be made on the day fixed for payment, and not later, and that no will grant reparation against confiscation. granted when the execution time becomes essential by the express terms of the contract, indicating, “[a] a court of equity has no more right than a court of law to waive an express stipulation of the parties with respect to the time in contracts of this nature.” of the “hire purchase agreement” whereby the hire purchaser (the equitable owner) was delinquent on as little as $63.75 in tax and interest payments, and the seller had attempted to enforce the buyer’s equitable interest pursuant to a harsh and inequitable forfeiture clause Many times the court will bail out the buyer delinquent, as it has in many “fair conversion” type cases that arise under installment purchase agreements, to avoid harsh and unfair forfeitures.
“Equitable conversion” cases are where the buyer purchases the property on an installment “deed contract.” In such cases, even if the deed and “legal title” are not delivered until all payments have been made, “equable title” is held by the buyer in the interim. In an oft-cited deed purchase contract, the Nevada Supreme Court bailed the buyer out of total forfeiture of the property, allowing him a reasonable time to cure, even though the time clause is of the essence, because the breach was minor. compared to the substantial forfeiture that would have occurred if the court had not rescued the buyer in equity. In Slope, the installment buyer was given a reasonable time to cure a default of $8,320.28 in light of the substantial investment of $90,000 in the disputed motel. The courts have been willing to bail out buyers from severe forfeiture when they have taken lawful and peaceful possession and improved the property and/or made substantial payments on it. However, in cases of inequitable conversion, the courts have not been as willing to bail out and will require strict compliance with the “time of the essence” provision. The Nevada Supreme Court has held that, [t]It is a well-established rule that in order for a buyer to successfully sue a seller for damages for breach of a land purchase agreement, the buyer must show that it has complied with all conditions precedent or concurring, or that such compliance has been excused. .
Even surrounding state appellate court decisions hold, identical to Nevada case law, that a seller of real property, pursuant to a real property purchase agreement, is justified in forfeiting the security deposit if the Buyer has failed to perform a material part of the contract that is a concurrent or precedent condition to Seller’s performance obligations. In one case, the real estate buyer offered his performance three hours after the specified time for performance. The appeals court ruled that the buyer had defaulted and was not entitled to a specific performance, because the “time is of the essence” clause and the plain language contained in that purchase agreement caused the contract to expire precisely three hours before performance. proposal.
It has been held that if neither party offers performance by the closing date set under a contract that stipulates that time is of the essence, the duties of both parties are fulfilled by the passing of that date.
When the escrow agreement specifies a definite time for performance, performance must be done within the time limit of the agreement, and the escrow agent has no power to deliver a deed thereafter. It is well established that performance must be done within the time limit of the escrow agreement.
The Nevada Supreme Court recently held that “this court will not rewrite the parties’ contract and will require strict compliance with the ‘time of the essence’ provision.
So real estate agents, attorneys, and buyers beware: the “time of the essence” clause is still in place in Nevada and surrounding states. Most courts will rely on this clause and longstanding precedent to deny any compensation to a late buyer, based on the sound legal principle that a purchase agreement expires on its own terms and will not be rewritten or extended by the buyer. court. The exception to the rule applies to avoid a severe and inequitable forfeiture when a delinquent installment buyer is rescued from a severe forfeiture that would not be justified by a relatively minor breach that could be remedied within a reasonable time. In such cases, equity laws will intervene to promote fairness and avoid the harsh and inequitable forfeitures that would otherwise result from the strict application of “time of the essence” clauses. In such cases, the courts have favored an action for damages rather than the total loss of a substantial equitable interest.
Copyright 2008, all rights reserved. HugginsLaw.com