In a very recent Ontario case, a builder sold three homes to a buyer. The first two closed without problem, but the third transaction was not closed on its original deadline of August 31, 2021 due to construction delays. 

The OTP was amended to change the closing date to January 28, 2022, and included a "time is of the essence" provision that was similarly worded to the original OTP. The balance of funds due on closing had to be paid AND received by the seller's lawyer by 3:00 PM on the scheduled January 28 closing date. Note the following, which took place throughout the month of January 2022:

• January 2022: The seller reminded the buyer that closing funds had to be paid on the closing date by 3:00 PM or the deal would be terminated.
• January 25: The seller's lawyer emailed the buyer's lawyer to remind them that funds were due at 3:00 PM on the closing day.
• January 27 (the day before closing): The buyer requested an extension of the closing to January 31 but the request was denied.
• January 28 (closing day): The buyer's lawyer emailed the seller's lawyer at 2:47 PM stating that the funds had been obtained, and the banking was being dealt with. 
• January 28 (closing day): At 3:10 PM the seller's lawyer advised the buyer's lawyer that they had instructions not to close because the deadline was missed. The funds were delivered and received at 3:35 PM, 35 minutes after the deadline.

 

The seller did not accept the funds and treated the OTP as terminated. 

The buyer sued to enforce the contract, lost, appealed that decision to the Ontario Court of Appeal and lost again. The Court said "time is of the essence" means that a time limit in an agreement is essential such that breach of the time limit will permit the innocent party to terminate the contract.

Our standard contract says in 3.1 (c), "Alberta time applies to this contract. Time is of the essence which means times and dates will be strictly followed and enforced."

Practically speaking, an argument over 'time is of the essence' rarely comes up because willing buyers and willing sellers both want to close. Extensions are often given without issue. But, and it's a big but, extensions do not have to be given for closing or any other timing. This deal was 35 minutes late. 

Five minutes late is late. Do not miss timing deadlines. Avoid arguments and lawsuits by making sure all deadlines under your control are strictly complied with.

Protect yourself.

Cheers,

Barry

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