How Long Can a Seller or Purchaser Adjourn a Closing?

Although most real estate contracts contain a provision stating a specific date for closing, the closing may not necessarily close on that date.  This is true whether the contract provides that the closing will occur on a certain date or on an “on or about” date.  If a coop or condominium board has not yet approved the transaction, or a lender, lender’s attorney, payoff bank attorney, title company, transfer agent, Purchaser or Seller or their respective attorneys or any other party necessary to the transaction is not ready or available, the closing may be adjourned. How long an adjournment is permissible, however, is frequently misunderstood.  Some real estate professionals believe that an adjournment is permitted only for a period of ten days.  Others insist that the parties are automatically entitled to an adjournment of thirty days.

The truth lies somewhere in the middle.  The case law in New York has established that both the Purchaser and Seller are entitled to a “reasonable” adjournment of the closing date. Unfortunately, what is considered reasonable is not easily quantifiable.  The courts have concluded that what constitutes a reasonable adjournment depends on the facts and circumstances of the particular case.  Thus, an adjournment of thirty days or more may be reasonable in some circumstances but not in others.  According to the New York Court of Appeals, “reasonableness” is determined by “… the nature and object of the contract, the previous conduct of the parties, the presence or absence of good faith, the experience of the parties and the possibility of prejudice or hardship to either one, as well as the specific number of days provided for performance…”

Since closings rarely occur on the closing date stated in the contract and delays of up to thirty days are common, many real estate professionals assume that a thirty day adjournment is an automatic legal right, when in fact, delays and adjournments of thirty days or longer are merely tolerated because of  practical reasons, i.e., Purchasers have few options when a Seller delays the closing other than to sue for specific performance to compel the Seller to close (a lengthy and expensive process) and Sellers are unlikely to declare a Purchaser in default if the closing is delayed as it would require the Seller to restart the entire selling process and to defend a suit to recover the contract downpayment initiated by the Purchaser.

Given the uncertainty in determining what constitutes a reasonable adjournment, real estate professionals should not advise their clients that a fixed number of days is automatically read into a closing date provision or that they are automatically entitled to adjournments of any particular duration, but rather that the closing date stated in the contract is merely a target date.

Source:
Schuman & Associates LLC
Keith Schuman
1536 Third Avenue
New York, New York 10028
Phone: 212.490.0100
Fax: 212.327.2556
Email: keith@schumanlawfirm.com
Website: www.schumanlawfirm.com

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