Background
On March 13, 2022, the parties executed an “as-is” Residential Contract for Sale and Purchase with a closing date of April 28, 2022. The contract expressly stated that time was of the essence and defined closing as the point when all required funds were received and cleared and all closing documents were delivered. Any modification required a writing signed by both parties.
The buyer obtained a loan commitment on March 28, but a review appraisal in mid-April reduced the property value. On April 27—the day before closing—a revised appraisal was transmitted. On April 28, the lender advised it could not approve the original loan and issued a counteroffer for a reduced amount, requesting additional documentation. The buyer was not “clear to close” on April 28 and did not obtain final loan approval until April 29. An addendum to extend closing was drafted but never executed by both parties.
The Court’s Holding
The Fourth DCA reversed the judgment for specific performance and damages. The court held that because time was of the essence in the contract, the buyer’s failure to be ready, willing, and able to close on April 28 constituted a material breach. The buyer could not close because her financing was not approved—a risk she bore under the contract’s financing contingency structure. The fact that the lender’s delay was beyond the buyer’s control did not excuse the breach where the contract made time of the essence.
The court further held that no valid modification extended the closing date because the contract required written modifications signed by both parties, and no such document was executed. Draft addenda and verbal communications about potential extensions did not satisfy the contract’s written-modification requirement.
Key Takeaways
- In time-is-of-the-essence contracts, a buyer who cannot close on the specified date—even due to lender delays beyond the buyer’s control—is in material breach and cannot obtain specific performance.
- Draft addenda to extend closing dates are ineffective absent execution by both parties when the contract requires written, signed modifications.
- A financing contingency protects a buyer whose loan is denied, but does not extend the closing date when the loan is merely delayed.
Why It Matters
This case is essential reading for Florida real estate practitioners handling residential transactions. It reinforces that time-is-of-the-essence clauses mean exactly what they say—a buyer who cannot close on the date specified, for any reason, is in breach. The ruling also highlights the critical distinction between a loan denial (which may trigger a financing contingency) and a loan delay (which does not excuse failure to close on time). Practitioners representing buyers should build adequate cushion into closing timelines and ensure extension addenda are fully executed before the original closing date passes.