Must the Contract be amended if the Settlement Date changes?
QUESTION: The Offer to Purchase and Contract (form 2-T) states that Settlement will take place on a specified date agreed to by the parties. An agent in my office has asked me if the parties agree that Settlement will take place on a date other than the date specified in the Contract—either before or after it—is it always necessary to do a contract amendment to reflect the different date?
ANSWER: We do not think a contract amendment is always necessary in such situations. As usual, though, it will depend on the circumstances.
If the Settlement is delayed, the Delay in Settlement/Closing paragraph in the Contract already provides that Settlement and Closing can take place in a seven-day period of time following the specified Settlement Date. We don’t think it’s necessary for the parties to modify the Contract to specify exactly what day the Settlement will take place within that seven-day time period. Of course, the parties will need to coordinate between themselves and the closing attorney as to when Settlement will take place during the seven-day delay period, but if the Contract itself is amended to reflect a new date, the seven-day delay period will apply to the new date as well unless the parties agree otherwise (which they certainly can do with the assistance of a real estate attorney).
On the other hand, if the delay is expected to be longer than seven days after the specified Settlement Date, the delaying party should seek the non-delaying party’s consent to amend the Contract to provide for a new Settlement Date, because the non-delaying party has the right to terminate the Contract after the seven-day delay period expires.
If the parties agree that Settlement will take place a day or two before the Settlement Date specified in the Contract, we don’t think that’s a big deal requiring a contract amendment. We might feel differently if the Settlement was going to be a week or more before the agreed-upon date because the seven-day delay period is tied to the specified Settlement Date, not the date that Settlement actually takes place. So, for example, if the parties agree informally that Settlement is going to be a week earlier than the date specified in the Contract, and then one of the parties is unexpectedly delayed, the delaying party would have 2 weeks within which to settle and close. Thus, in that situation, a contract amendment might be considered so that the seven-day delay period would run from the new, earlier Settlement Date rather than the original Settlement Date.
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