The clocks were all set back one hour on 5 November 2023. This is a time when many real estate agents want to get their message out to the public: “turn back your clocks”. In fact, there are entire streams of social media posts and newsletters to this same effect.
Thankfully, on account of the real estate industry everyone knows all about the time.
4 November 2023 Deals
So, here’s a question. If a deal is struck at 4:00 pm on 4 November 2023, when is the deposit due at the very latest, before the deal falls into default?
It’s a simple enough question, and obviously, everyone in the real estate industry should get it right.
Let’s add some interest and complications
Paul Hewson is the Listing agent acting on behalf of Jane Seymour. They accept an Offer of $1,000,000.00 on Jane’s house. The deposit is due “upon acceptance”. The deposit is in the amount of $50,000.00. The deal was struck precisely at 4:00 pm. The Confirmation of Acceptance was completed and states 4:00 pm.
The Buyer, Katherine Howard was personally present at Jane’s house with her agent Gordon Sumner at the time her Offer was accepted. She received her copy at 4:00 pm.
But, here’s the complication, Catherine Parr prepared and signed an Offer on this same property. Although the scheduled time for arrival and presentation of Offers was 3:00 pm, her agent, Reginald Dwight was late. He was stuck in traffic on the 401 and the battery in his phone went dead. So, he arrived at 5:00 pm with an Offer for $1,100,000.00. Dwight spoke to Sumner (successful Buyer’s agent) on the driveway and told him of the $1,100,000.00 Offer and hoped that he was not too late.
As luck would have it, Hewson was still in the house, as was Jane Seymour. They obviously both want the $1,100,000.00 Offer.
Katherine Howard, the successful Buyer, is not all that thrilled with the house, In fact, she would rather assign her Offer over to Catherine Parr and pick up $100,000.00 for her time.
Who gets the $100,000.00:
- The Seller, or
- The first Buyer, in a quick flip?
When is the Deposit actually due, when the clocks turn back
Let’s go through this. Upon acceptance in the Agreement standard OREA form is extended to mean “within 24 hours”. Note that it said “within”. It did not say “24 hours”. That means one second short, or 23:59:59 hours.
We should do the count:
Remember, we are starting with 4:00pm (this is time zero)
Number of Hours Actual Time
1 5:00 pm
2 6:00 pm
3 7:00 pm
4 8:00 pm
5 9:00 pm
6 10:00 pm
7 11:00 pm
8 12:00 am
9 1:00 am
10 2:00 am (now, renamed 1:00 am)
11 2:00 am
12 3:00 am
13 4:00 am
14 5:00 am
15 6:00 am
16 7:00 am
17 8:00 am
18 9:00 am
19 10:00 am
20 11:00 am
21 12:00 pm
22 1:00 pm
23 2:00 pm
24 3:00 pm
This means that 24 hours took us out to exactly 3:00 pm, which is one second too late. The correct deadline would be 2:59:59 pm.
If the Buyer’s agent gets it there on time, that is 2:59:59 pm, then, his client Katherine Howard gets the house for $1,000,000.00 which she can assign to Catherine Parr for $1,100,000.00 and keep the extra $100,000.00. All in a days work!
If her agent arrives at 3:00 pm or later, then she is in default. That means that the Seller can terminate the Agreement of Purchase and Sale on account of the default and sell the property to Catherine Parr for $1,100,000.00. This means that the Seller gets the extra $100,000.00.
Telling the Time
Since, $100,000.00 was at stake, this became a $100,000.00 question for real estate agents. Hopefully, your real estate agent knows how to tell the time. Next time your real estate agent tells you to change your clocks, you might ask them this question.
Brian Madigan LL.B., Broker
Comments 1
I’m still sick at one buyer agent telling the other buyer agent what is in his client s’s offer!!