What Are “Time Is of the Essence” Clauses and How They Impact Real Estate Closings in NY

In New York real estate transactions, deadlines matter—but not all deadlines carry the same legal weight. One phrase in particular can dramatically change the outcome of a delayed closing: “time is of the essence.”

Buyers and sellers often see this language in contracts or pre-closing notices without fully understanding its consequences. In practice, a time is of the essence clause can determine whether a deal survives a missed deadline or collapses entirely.

What Does “Time Is of the Essence” Mean in Real Estate?

A time is of the essence clause makes a contractual deadline legally strict. When this language applies, failure to perform by the specified date is considered a material breach of the contract, not a minor delay.

Without this clause, New York courts often treat closing dates as flexible, allowing reasonable delays if the parties are acting in good faith. Once time is of the essence is invoked, that flexibility disappears.

Where Time Is of the Essence Appears in NY Transactions

In New York, time is of the essence may appear in two main ways:

• In the original contract – Some contracts include this language from the outset, making deadlines strict from day one.
• By written notice before closing – More commonly, one party serves a formal notice making time of the essence after delays or concerns arise.

A proper notice must clearly state:

• That time is now of the essence
• A specific closing date
• That failure to close on that date will result in default

Courts closely scrutinize these notices, and mistakes in wording or timing can invalidate them.

How It Impacts Buyers

For buyers, a time is of the essence deadline can be risky if financing, inspections, or title issues are not fully resolved.

If a buyer fails to close on a valid time of the essence date, they may:

• Lose their deposit
• Be declared in default
• Lose the right to enforce the contract

This is especially important in competitive Long Island markets, where delays are common but tolerance can disappear quickly once this clause is invoked.

How It Impacts Sellers

For sellers, time is of the essence can be a powerful tool—but also a potential liability.

If a seller invokes the clause improperly or is not ready, willing, and able to close on the stated date, the seller may:

• Be found in breach themselves
• Lose the right to cancel the contract
• Face legal claims from the buyer

A seller cannot use time is of the essence to pressure a buyer while failing to meet their own obligations.

Common Situations Where Disputes Arise

Time is of the essence disputes often arise when:

• Financing approval is delayed
• Title defects surface late in the process
• One party is using delays strategically
• Market conditions change and one side wants out

In these situations, whether the clause was properly invoked—and whether the parties complied—can determine who keeps or forfeits significant sums of money.

Is Time Is of the Essence Automatic in NY?

No. Time is not automatically of the essence in New York real estate contracts.
Unless the contract explicitly states it, courts usually treat closing dates as target dates, not drop-dead deadlines.

That distinction is critical. Many buyers and sellers mistakenly assume that missing a closing date automatically voids the deal. In reality, the legal consequences depend on whether time was formally made of the essence.

Why Legal Guidance Matters

Because time is of the essence clauses carry serious legal consequences, they should never be taken lightly. Whether you are considering invoking one—or responding to one—legal review is essential.

An experienced real estate attorney can:

• Evaluate whether the clause or notice is legally valid
• Advise on risks before a closing deadline
• Protect deposits and contractual rights
• Help resolve disputes before they escalate into litigation

Time is of the essence clauses can protect parties from endless delays, but they can also abruptly end a transaction if mishandled. In New York real estate closings, understanding when deadlines are flexible—and when they are absolute—can make the difference between closing successfully and facing costly legal consequences.

Chiariello & Chiariello advises buyers and sellers throughout Long Island on complex real estate disputes and contract enforcement issues. If questions arise about deadlines, closing delays, or contract enforcement, contact us today!

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