Most state courts, including the Nevada Supreme Court, recognize and enforce the integrity of “time is of the essence” clauses. The Nevada Supreme Court recognizes that, under common law, a delivery of money, which a party is obligated to pay at a particular time and place, must be made on the day fixed for payment, and not later, and that the repair against confiscation will not be possible. granted when performance time is made essential by the express terms of the contract, stating, “[a] A court of equity has no more right than a court of law to dispense with an express stipulation of the parties regarding time in contracts of this nature.” of the “hire purchase agreement” whereby the hirer equitable owner) was only $63.75 in arrears in tax and interest payments, and the seller had attempted to enforce the buyer’s equitable interest, pursuant to a harsh and unfair forfeiture agreement Many times the court will bail out the buyer delinquent, as it has in many “fair conversion” type cases that arise under installment purchase agreements, to avoid harsh and unfair forfeitures.
“Equitable conversion” cases are those in which the buyer purchases the property in a “deed contract” in installments. In such cases, even though the deed and “legal title” are not delivered until all payments have been made, “equitable title” is held by the buyer in the interim. In an oft-cited deed purchase contract, the Nevada Supreme Court rescued the buyer from foreclosure of the property, allowing him reasonable time to cure, even though the time clause is essential, because the breach was minor. compared to the substantial forfeiture that would have occurred if the court had not bailed out the buyer in equity. In Earring, the installment buyer was given reasonable time to cure a default of $8,320.28 in light of the substantial $90,000 investment in the disputed motel. Courts have been willing to bail buyers out of severe forfeiture when they have taken legal and peaceful possession and improved the property and/or made substantial payments on it. However, in inequitable conversion cases, the courts have not been as willing to bail out and will enforce strict compliance with the “time is of the essence” provision. The Nevada Supreme Court has held that, [t]It is a well-established rule that in order for a buyer to successfully sue a seller for damages for breach of a land purchase contract, the buyer must show that they have met all of the preceding or concurrent conditions, or that they compliance has been excused. .
Even the appellate court decisions of surrounding states hold, identical to Nevada case law, that a seller of real property, pursuant to a real property purchase agreement, is justified in canceling the security deposit if the buyer has failed to perform a material part of the contract that is a concurrent condition or precedent to the seller’s performance obligations. In one case, the real estate buyer offered to fulfill three hours after the specified time for fulfillment. The appeals court ruled that the buyer was in default and not entitled to a specific performance, because the “time is of the essence” clause and the clear language contained in that purchase agreement caused the contract to expire precisely three hours before performance. proposal.
It has been held that if neither party offers to perform by the date fixed for closing under a contract that stipulates that time is of the essence, the duties of both parties are fulfilled after that date.
When the escrow agreement specifies a definite time for performance, performance must take place within the agreement’s time limit, and the escrow agent has no power to deliver a deed thereafter. It is well established that compliance must take place within the time limit of the escrow contract.
The Nevada Supreme Court recently held that “this court will not rewrite the parties’ contract and will enforce strict compliance with the ‘time is of the essence’ provision.
So real estate agents, attorneys, and buyers beware: the “time is of the essence” clause remains in effect in Nevada and surrounding states. Most courts will rely on this clause and longstanding precedent to deny any compensation to a late buyer, based on the sound legal principle that a purchase agreement expires on its own terms and will not be rewritten or extended by the buyer. court. The exception to the rule applies to avoid a harsh and unfair forfeiture when a delinquent installment contract buyer is rescued from a harsh forfeiture that would not be justified by a relatively minor breach that could be cured within a reasonable time. In such cases, equity laws will step in to promote equity and avoid harsh and inequitable forfeitures that would otherwise result from the strict application of “time is of the essence” clauses. In such cases, courts have favored an action for damages over the total loss of a substantial equitable interest.
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