Deadline Danger: Key Contract Dates to Know

In real estate, time isn’t just money—it’s legally binding. From the moment a contract is ratified, a clock starts ticking on a series of critical deadlines that can make or break a deal. Whether it’s delivering the earnest money deposit, completing a home inspection, or securing financing, each step is governed by strict timelines. Miss one, and you could risk losing the home, your deposit, or even open yourself up to legal consequences. In this post, we’re breaking down the key contract dates every buyer and seller needs to know—and why understanding the phrase “time is of the essence” could save your deal.

Contract Date

The contract date refers to when the agreement was initially drafted, serving primarily as a reference point. The more important date is the ratification date.

Ratification Date

The ratification date in a real estate contract is the date when all parties have signed the agreement and the final signed copy has been delivered to all the parties involved. It marks the moment the contract becomes legally binding and enforceable.

This date is critical because it starts the clock for all time-sensitive contingencies and deadlines—such as inspection periods, financing approvals, and closing timelines. Without ratification, the contract has no legal effect, even if all signatures are present.

In short:
Ratification Date = All signatures completed + contract delivered = Day 0 (zero)

In other regions, it is often referred to as the effective date or the executed date. 

For counting purposes, the ratification date is considered Day Zero. 

Time is of the Essence

"Time is of the essence" is a legal phrase used in contracts to emphasize that meeting deadlines is a material part of the agreement. When this clause is included, both parties are legally obligated to perform their duties within the specified time frames. Failure to do so constitutes a breach of contract and can result in penalties or the contract being voided.

In real estate, this often applies to actions like submitting deposits, completing inspections, or closing on time. If a party misses one of these deadlines, the other party may have the right to cancel the deal or seek damages.

In short: Deadlines are not suggestions—they’re enforceable obligations.

Calendar Days and Business Days

Unless it specifically mentions 'Business Days', then a reference to 'Days' means calendar days. Business Days are defined as any day that is not a Saturday, Sunday, legal holiday, or day on which the state or federal government office is closed.

Time Period

In the Northern Virginia contract, the day ends at "9:00pm in the Eastern Time Zone of the United States." In DC contracts, the day ends at 6:00pm and in the Maryland contract the day ends at midnight, which begs the question, is midnight the end of the day or the beginning of the next? Be sure you get it right. 

OK, now that we got some important definitions out of the way, let's look at some important deadlines. 

Earnest Money Deposit (EMD)

The buyer is typically given a set number of business days—commonly 3 to 5—to deliver the earnest money deposit to the Settlement Company (or, less commonly, the Buyer’s Brokerage). Since most settlement companies are closed on weekends and holidays, these deadlines refer specifically to business days. Missing this deadline gives the seller the right to void the contract, so prompt delivery is critical to keeping the deal alive.

Home Inspection

In the Northern Virginia contract, buyers typically have two options when including a home inspection contingency. Option 1 allows the buyer to either request repairs or void the contract based on the inspection results. Option 2 gives the buyer only the right to void the contract, with no ability to request repairs.

The contingency is structured in several phases:

Inspection Period

This is the number of days the buyer has to complete the home inspection—commonly between 1 and 10 days. In competitive markets, some buyers may choose to do a pre-offer inspection, meaning they submit their offer without a contingency. If the buyer decides to void under either option, they must send written notice and provide the full inspection report before the inspection period ends. If no action is taken, the contingency expires and the contract proceeds as-is.

Negotiation Period

If Option 1 is selected and the buyer wishes to request repairs, they must submit both a signed addendum outlining their requests and the full inspection report before the inspection period expires. Once received by the seller, a negotiation period begins—usually lasting 3 to 5 days.

Buyer’s Election Period

If no agreement is reached during negotiation, the buyer enters the election period. At this point, they can either void the contract or proceed, in which case the inspection contingency is removed.

Financing Contingency

The financing contingency is a clause that allows the buyer to cancel the contract, without penalty, if they are denied financing within a set timeframe. It is important to remember, that the buyer must provide a denial letter from their lender for the specified financing. Common timeframes are anywhere from 5 to 25 days. 

There are two options in this contingency:

1. Automatic Expiration
   The contingency automatically expires on the financing deadline stated in the contract. If the buyer hasn’t voided the contract or confirmed loan approval by that date, the contingency is removed, and the buyer must proceed with or without financing.

2. Automatic Extension
   If certain conditions are met—such as the seller not delivering a required notice—the contingency automatically extends beyond the deadline. This protects the buyer by giving additional time to obtain financing unless the seller takes specific steps to terminate it.

Understanding which type is in your contract is crucial, as it impacts your ability to exit the deal if financing falls through.

Appraisal Contingency 

The appraisal contingency typically unfolds in three phases:

1. Appraisal Deadline: Within a specified number of days after contract ratification, the buyer must obtain an appraisal. If the appraised value is equal to or greater than the sales price, the contingency is satisfied, and the contract proceeds. If the appraisal is lower, the buyer must notify the seller, providing the appraisal report and then they enter the negotiation period. This period often coincides with the financing deadlines. 

2. Negotiation Period: Upon notification of a low appraisal, both parties enter a negotiation period, typically lasting a few days. During this time, they can negotiate a new sales price. If an agreement is reached, an addendum is signed, and the contract continues with the new terms.

3. Buyer's Election Period: If no agreement is reached during the negotiation period, the buyer has a set number of days to decide whether to proceed with the original contract price or void the contract. If the buyer takes no action, the contingency is removed, and the contract remains in effect at the original price.

This structured approach ensures both buyer and seller have clear options and timelines to address appraisal discrepancies, promoting transparency and fairness in the transaction.

Settlement Date

The settlement date, also known as the closing date, is the day when the buyer pays the purchase price and the seller transfers ownership of the property. It's the final step in a real estate transaction where legal ownership officially changes hands. Remember the definition of 'time is of the essence'? If the buyer misses the settlement date, even by one day, the buyer is in default and risks losing their earnest money deposit or facing legal action. 

Understanding contract deadlines isn’t just about staying organized—it’s about protecting your investment. Whether it’s delivering earnest money, navigating the inspection process, or meeting settlement day with confidence, every date on your contract matters. Miss one, and you could lose more than just time. A good agent will stay on top of all these deadlines and protect your interests.