Buyer's Notice to Perform-When does it begin?

By
Services for Real Estate Pros with Escrowcoord.com

servedWhen does a Buyer's Notice to Perform timeframe begin?

 Had a friend who sold her out of area home through another agent.  The seller's had completed a 24 hour notice for the Buyer's to Perform on Friday 8pm and sent it to their agent to forward to the buyer's agent.

 The buyer's did not respond to the notice until Sunday evening (48 hours later).  My friend cancelled the escrow on Monday.  Now of course, the buyers are threatening to sue.  

 My first question to her was when did the buyer's agent receive the notice to perform? She wasn't sure but a local real estate attorney informed her that the time began when she emailed the notice to her agent!

 And the broker representing her told her the notice to perform is BUSINESS days not calendar days!

 Something's fishy here. When I looked at our California Association of Realtors Notice to Perform, it does NOT specify when the timeframe begins, however it DOES have an area for the buyer or buyer's representative to sign acknowledging receipt.  There is no indication of the days being represented at business or calendar days.

 I did leave a message with the legal department at the California Association of Realtors to get the skinny from them.

 Thinking the worse case scenario, what if a buyer's agent and/or buyer declines to acknowledge this notice? I can see where they might string out the deal to their advantage in this manner.

 A purchase agreement contract and counter must be acknowledged verbally and/or in writing in order to have acceptance.  I would think the same rule applies for a notice to perform.  Did my friend get some bad advice? I think she might have!

 By the way, her agent and his broker have "washed their hands" from the deal and are no longer representing her. This is a sad situation were the seller's really didn't have to sell and the buyers nitpicked and stalled trying to negotiate a great deal for themselves to the point where the seller's said "enough."

Comments (24)

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Our MD or VA contract provides that "DAYS" are calendar days.  All notices and addenda would follow whatever the contract states about what constitutes a "day". 

Anyway, what difference whether it is calendar or business days if it has been "several" days.  Again, in MD and VA, "NOTICE"s do not have to be acknowledged.  They are NOTICEs, not addenda. 

Sell the house. 

Sep 18, 2008 10:02 AM
Sandra Carlisle (Ayers)
Berkshire Hathaway California Properties - Newport Beach, CA
Real Estate Marketing & Sales

First of all, it's Notice to Perform, not a Notice to Acknowledge the notice to perform.  I give the notice to perform either 24 hours (unless the time is changed in the contract) before the contingency removal date, so that the buyer doesn't have even an extra day to drag it out.  (When I represent the buyer, I don't say a word, since most agents don't know they are suppose to give one...)  This gives my buyer extra time.  I also write in 72 hours instead of the standard 24 that are given when I represent the buyer.

The new California Contract (5 years new anyways) is not a passive contract like the previous one.  It is active and contingencies have to be removed in writing.  Sellers need to stay on top of this.  A seller is not required to cancel the contract simply because they give a buyer a notice to perform, but rather, it helps the seller to cover themselves in the event the buyer decides to start jerking them around.  They would have a shorter leg to stand on without it and less options to get out and possibly keep a portion of the deposit if the buyer defaults.  

i don't know where the business day vs. calendar day argument would come from, since the notice to perform is based on hours on the California Residential Purchase Agreement and a set day based on which contingencies are going to be removed.  

Something is definitely fishy here, but I think it's fishy on both sides.  Is the seller certain that their agent delivered the Notice?  The buyers, if the notice was delivered and not relayed to them until it was too late, might have a lawsuit against their agent.  Sounds like two sides with substandard business practices to me...

I'd like to know what the lawyers say about this one, I hope you keep us informed about how it turns out...

Sep 18, 2008 10:06 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

Can't comment on CA, but here in Georgia days are days, not business days and notice is when the agent of a represented client is sent via fax, email or certified mail.  Phone calls are out here.  Regular snail mail out. 

If a buyer chooses to be a customer and not be represented notification must be buyers email, fax or certified mail.

I hope your friend gets this worked out.

Sep 18, 2008 11:21 AM
Holly Beller
RE/MAX Excellence - Long Beach, WA

Well said Sandra!  Also, it appears that the seller cancelled escrow herself when the listing agent should have been handling this..possibly that is why they "washed their hands" of the deal.  I always rely on the tried and true "time is of the essence" which any judge is going to hang the selling agent on...

Sep 18, 2008 11:36 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Hi Diana, Sandra is correct it is a Notice to Perform and it is Delivered via Fax Generally to the Agent representing the Principal in this case the Buyer's Agent, it is based on hours. I suggest you tell your friend to hire a Real Estate Attorney. From what little information you provided sounds like the Seller will be fine. What is the Buyer going to Sue for? For the Seller to Sell the house to him? In order to do that the Buyer has to perform and remove all contingencies and close the Deal. Sounds to me the Seller wanted to Sell, so she wins anyway.

Sep 18, 2008 11:40 AM
Emily Lowe
The Lipman Group | Sotheby's International Realty - Nashville, TN
Nashville TN Realtor

Not sure about CA policies, but I hope your friends don't get shafted through this!

Sep 18, 2008 11:57 AM
Sherry Peckhoon Sim
Sims & Company - Cayucos, CA
Broker/Owner, Covering the Beautiful Central Coast

Hi Diana, I am with Sandra. Was in a transaction where I represented the buyers.  Both parties were stalling, and buyers were served a NOP by the sellers.  Long story.  Anyway, the listing agent based on the time she emailed the NOP, or the time of delivery to me.  I didn't question this, as it was 72 hours (my custom time). I had changed the default time of 24 hours to 72 hours, and we based on 'calendar days'.  I would be interested to know what CAR attorney advises.

Sep 18, 2008 06:48 PM
Marcia Kramarz
Re/Max Executive Realty - Medway, MA
CDPE,LMC,CBR

Id does sound like you need assistance from an attorney to wade thru this... Good luck...

Sep 18, 2008 10:48 PM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Kevin! It's dog eat dog out there, that's for sure. You have to have a willing buyer and seller or the chances of the deal not going through are high. Thanks for your comment!

Sep 19, 2008 03:10 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Samantha! Thanks for the vote of support!

Sep 19, 2008 03:12 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Lenn. A great point you make! It IS a notice not an agreement! I too agree that unless stated, we assume it's calendar days. Thanks for your comment!

Sep 19, 2008 03:13 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Mornin' Sandra! I agree with you completely! I'm still waiting for CAR attorneys to get back to me on this one.  I'll let you know. Thanks for your comment!

Sep 19, 2008 03:15 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Tammy! Thanks for your comment. I guess the question is have we given notice when we deliver it to the other side OR when they recieve it? Still waiting for the attorney's at CAR to call back...

Sep 19, 2008 03:20 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Holly, you are so right. Sometimes agents don't take the contract seriously enough. They start getting sloppy with time frames. Most of the time, it's not a problem, but every once in a while, they get caught with their pants down and have to explain to their client why the deal died! Thanks for your comment!

Sep 19, 2008 03:22 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Endre, Thanks for your comment. Here's where the situation gets ugly. The buyer had removed all the contingencies and was still within the timeframe to close, but started arguing about furniture (was not part of the contract). The NOP was to accept the furniture the seller was willing to give them or cancel the deal. Oh boy, what a story!

Sep 19, 2008 03:25 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Sherry. That's interesting how that agent interpreted the time frame. I think it's a great idea to change the notice to perform on the contract to 72 hours when representing the buyer. What happens however, if it's a NOP for closing and the 24 hours falls on the weekend when the county recorder's office is closed? The NOP is very vague. Check back here to see what the attorney's at CAR say....Thanks for your comment! 

Sep 19, 2008 03:28 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Marcia-We'll see what transpires. I'll let you know! Thanks for your comment!

Sep 19, 2008 03:29 AM
Sandra Carlisle (Ayers)
Berkshire Hathaway California Properties - Newport Beach, CA
Real Estate Marketing & Sales

How can a Notice to Perform be served on the furniture if it wasn't a part of the contract?  With that new information, the buyers have a right to be ticked if the seller canceled escrow over something that was not part of the contract.

The furniture is a separate negotiation, it has nothing to do with the house.   Realtors are not in the furniture business.  Are the buyers asking to change the sales price over furniture last minute?  Are the buyers threatening not to close over the furniture?  The notice can and should be served with the timeframe for the closing of escrow to happen or for contingency removal, but again, if the furniture is not in the contract (not a contingency) which states how a notice to perform is suppose to be used, then why is it being used for a separate sale that is separate from the house sale? That is not it's purpose...

Am I missing something?

As far as the NOP being received when the timeframe falls on the weekend, if it is served for contingency removal, that can be done on the weekend and if it is for Closing Escrow, the date for COE is usually not a weekend and therefore wouldn't really apply unless the listing agent didn't serve the NOP at the appropriate time.  If that is the case, the seller should take it up with the listing agent for not sticking to the timeframes.

 

Sep 22, 2008 08:56 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Sandra, I have a feeling we are missing a lot of information regarding what the NOP was for specifically!

I did speak with an attorneyat CAR who told me that the NOP time-line begins upon RECEIPT of the notice by the other agent or their client. Makes the most sense to me.

He wasn't sure about the notice being business or calendar days. Was going to get back to me on that. However, I checked the purchase agreement contract and it does indicate that day's are assumed to be calendar unless otherwise required by law. Rather vague, but better than nothing!

I also asked him about the situation where the recipientof the NOP avoids it thus extending the time-line. He indicated the BEST way to ensure notice has been delivered is through certified mail.

So there you have it folks. Whoever is submitting/demanding a notice to perform must be diligent in obtaining an acknowledgment of receipt (in writing) in order to accurately ascertain when the time-line starts. The NOP assumes we are talking about calendar days unless otherwise required by law. I'm going to throw in that if it's a demand to close or add money to the escrow, it has to be business days. My thought is I would want to specify calendar or business right on the NOP just to be very clear.

Thanks to all of you for your comments and personal experiences! This is how we round-table discuss these issues and hopefully avoid future litigation!

Sep 23, 2008 03:36 AM
Anonymous
Matt Langenbach

The CA NBP (Notice for Buyer to Perform) was changed in 2010 to set the default time frame within which to answer to 48 hours.  I constantly hear agents say that the law now is that the performance perios is 48 hours. This is simply not true.  The courts do not tell you how to contract. There are rules for validity, but generaklly the courst do not tell you how to agree to something; certainkly not how long yout notice to the buyer to perform should be.

As far as when the notice period commences, the law is fairly clear in that it begins upon receipt by the buyer's agent.  When ia that? The purchase agreement "should" state how notice is to be accomplished.  If it's faxed, and you have a fax stamp, that is the time of commencement.  One could also argue, if email is being regularly used by both parties to the transaction, that the time stamp on the enail is the notice period.  The very best method for ensuring notice is received is to request and receive confirmation of receipt bu the buyer's agent.

In the new CA NBP, the notice period default is 2 days.  I always, as a matter of practice and to avoid any confusion, write in the period as a number of hours, which is unambiguous.  No calendar vs business-days argument can be made.

Feb 08, 2013 02:05 AM
#25