Is Contract Amendment Required for Early Settlement?

QUESTION: Several weeks ago, my buyer client entered into an Offer to Purchase and Contract (Form 2-T). In paragraph 1(l), the parties agreed that Settlement would take place on July 25. The parties now want to move Settlement Date up to July 23. I remember that the old Contract form provided for closing “on or before” a date certain. Since the “on or before” language is no longer in the Contract, do the parties now have to complete a written amendment in order to move up the Settlement Date?

ANSWER: Since time is not “of the essence” with respect to the Settlement Date, it should be viewed as a target date rather than an exact date on which the Settlement must take place. For that reason, if the parties agree to have the Settlement a couple of days early without a formal amendment, we do not believe that should ordinarily present any problems. Having said that, there certainly wouldn’t be anything wrong with the parties signing a written amendment, and in some cases, even though the parties are willing to have the Settlement early without a written amendment, the buyer’s lender may insist on something being signed.

If a formal amendment is needed, the Agreement to Amend Contract (form 330-T) provides a simple way for the parties to move the Settlement Date forward or backward; a check box is provided for just this purpose.

You are correct that the old Contract provided for closing “on or before” an agreed-upon date. The “on or before” language gave rise to occasional disputes where one of the parties would argue that the “or before” language gave them the right to insist on an earlier closing date without the agreement of the other party. The “or before” thus was dropped in an effort to avoid such misunderstandings.