Time of the Essence Notice
(Pro-Seller) (NY)

Summary

This is a notice delivered by a seller of New York real estate to the purchaser declaring that time is of the essence to close the transaction. This notice informs the purchaser that failure to perform by a certain date is deemed a material breach of the purchase contract. This template includes practical guidance, drafting notes, and an alternate clause. In New York, a "time is of the essence" provision is commonly used in commercial and residential real estate transactions to require the performance of certain obligations by a specific date. In such cases, a party's failure or delay in performance constitutes a material breach of the purchase and sale agreement. Most purchase and sale agreements in New York provide for a closing date that is time of the essence, which allows the parties to insist on strict compliance with the deadline to close the transaction. If the purchaser fails to close on such date, the seller may terminate the agreement, retain any earnest money deposit as liquidated damages, bring an action against the purchaser for specific performance, or sue for breach of contract. Similarly, if the seller fails to close on a time of the essence closing date, the purchaser may seek specific performance of the purchase and sale agreement or bring an action for damages. Parties may specify that time is of the essence by either: • Including a time is of the essence provision in the purchase and sale agreement –or– • Declaring that time is of the essence in a separate notice delivered after the purchase and sale agreement has been executed. For a time of the essence provision contained in a purchase and sale agreement to be valid and binding, the purchase and sale agreement must explicitly include language to that effect. ADC Orange, Inc. v. Coyote Acres, Inc., 7 N.Y.3d 484, 489 (2006). Even if the agreement provides that the transaction must close by a certain date, the closing date will not be time of the essence unless explicitly provided therein. N. Triphammer Dev. Corp. v. Ithaca Assoc., 704 F. Supp. 422, 429 (S.D.N.Y. 1989). If the purchase and sale agreement does not include a time is of the essence clause, a party may declare a closing date that is time of the essence by providing notice to the other party after the original closing date has expired. A time is of the essence notice must be delivered after the original closing date identified in the agreement. The notice must be clear, distinct, unequivocal and provide a definite and reasonable time in which to perform. See Savitsky v Sukenik, 240 AD2d 557, 558 (1997). The time of the essence letter must be given in good faith and must expressly advise the purchaser of the consequences for failing to close by the date chosen by the seller. The notice will be binding on both parties. Thus, on the date chosen for closing, both parties must be ready, willing, and able to perform and close the transaction. For a time of the essence notice that can be used by a purchaser in New York, see Time of the Essence Notice (Pro-Purchaser) (NY). For more on time is of the essence provisions in New York, see Time of the Essence Clause in Time of the Essence Clause (Purchase and Sale Agreement) (NY). For additional information, see Purchasing and Selling Commercial Real Estate Resource Kit (NY), Purchasing and Selling Residential Real Estate Resource Kit, and Purchase and Sale of Residential Real Property (NY).