We’ve all been there. We need to extend a closing date and the other party isn’t willing. Will the unilateral extension keep you in contract for another 8 days?
It depends. The GAR contract allows a unilateral extension for various reasons, but they are not so simple to understand. The first is a valid title objection.
This is the language:
“Buyer/ Seller hereby gives notice to the other parties to the above-referenced purchase and sale Agreement that the closing date is extended for eight (8) days for the following reason(s):
Let’s look at 2 different scenarios.
The owner of the property is working through a personal bankruptcy. A primary rule of bankruptcy is that a property owned by the bankrupt party cannot sell a property without the permission of the court. Assuming no other issues, a court order is needed to close the deal.
Yes, there is a title objection, but does it fit into one of the exceptions? If the title issue can be resolved by the payment of money, then it’s an exception and “valid title objection” does not work for the 8- day extension. In this case, however, the bankruptcy only requires a court order to allow the sale, not the payment of money, so the answer is no. Payment of money is not the issue; getting an executed court order is the issue. The unilateral 8-day extension applies. If the court order can be executed within the ensuing 8-day window, and the extension was timely, then the extension was proper.
Next week we’ll look at an example of an improper use of the extension...
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