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Massachusetts Law Review

Real Estate Law: "Time is of the essence" means what it says

Owen v. Kessler, 56 Mass. App. Ct. 466 (2002)

In Owen v. Kessler,1 the Appeals Court showed no tolerance for tardiness by strictly enforcing a "time is of the essence" clause in an offer to purchase real estate after the buyer delivered a signed purchase and sale agreement to the seller 15 to 20 minutes after the deadline specified in the offer to purchase. Waiver of a "time is of the essence" clause will be construed to have occurred only when the words or conduct of the parties clearly demonstrate that such was their intention.

Tara Owen and Steven Wardle both desired to purchase the property at 410 Main St., Chatham, owned by Sidney Kessler as trustee for The Hammond House Realty Trust. Owen was already the tenant of the property, where she lived and operated a gift shop. Wardle operated a goldsmith business next door.

Wardle acted first by submitting an offer to purchase on the standard Cape and Islands Real Estate Board form, which was accepted by Kessler on Sept. 12, 1997.2 The offer required the parties to execute a purchase and sale agreement on or before 11 a.m. on Friday, Sept. 26, 1997, and specified that "time is of the essence hereof." The offer thus allowed two weeks for Wardle to conduct a property inspection and negotiate the purchase and sale agreement with Kessler.

Owen then submitted to Kessler a "back-up" offer to purchase, which was contingent upon the sale to Wardle failing. The purchase prices of the two offers were identical.

After some scheduling delays, which engendered discussions between the brokers for Wardle and Kessler of a possible extension, the property inspection was satisfactorily completed on Wednesday, Sept. 24. Wardle's New York lawyer then signed a standard purchase and sale agreement (to which he had made some changes) as agent for Wardle and sent it by overnight mail to Wardle's broker, Thomas Patten, in Chatham, where it arrived between 10:30 a.m. and 10:45 a.m. on Friday, Sept. 26. Patten was then expected to deliver the agreement to Kessler's broker's office four minutes away. However, Patten had not yet left his office when the 11 a.m. deadline passed, followed promptly by a call from Kessler's broker to Patten informing him that because the deadline had been missed, the property would be sold to someone else, presumably Owen. Following the phone call, Patten delivered the purchase and sale agreement to Kessler's broker, the time then being approximately 11:15 or 11:20 a.m.

Both Wardle and Owen sued Kessler for specific performance. In the consolidated, jury-waived trial, the Superior Court judge found for Wardle by concluding that the 15- to 20-minute delay was de minimus and that Kessler had waived the "time is of the essence" clause by breaching the duty of good faith and fair dealing in not accepting the purchase and sale agreement so shortly after the deadline.3

The Appeals Court reversed, declining to find any waiver of the "time is of the essence" clause, which requires that parties be held to the deadlines imposed on themselves. "Once 11:00 a.m. passed," concluded the court, "the seller no longer had an obligation to the buyer."4 The case was remanded to the Superior Court for entry of a judgment in favor of Owen on her complaint for specific performance.

The Appeals Court distinguished the circumstances in Kessler from those in two cases in which waivers were found. In McCarthy v. Tobin,5 the parties had continued to deal after the expiration of the deadline to sign the purchase and sale agreement. In Church of God in Christ, Inc. v. Congregation Kehillath Jacob,6 continued dealings as well as acceptance of payments after the deadline represented "unassailable" evidence of conduct constituting a waiver.7

In Kessler, the Appeals Court found no breach of the covenant of good faith and fair dealing, which provides that "neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract."8 Kessler had made no attempt to sabotage the sale to Wardle. He merely waited until the agreed-upon deadline passed, thereby allowing him to call off the deal.

Although the Appeals Court declined to find Wardle's 15- to 20-minute delay in delivery of the purchase and sale agreement to be de minimus, it did leave the door open just a crack for latecomers by noting that "we need not decide whether, upon different facts, a failure to comply with a time is of the essence provision may be disregarded as de minimus."9 Little solace for the hapless broker Patten and his client Wardle for whom the words of Shakespeare in an entirely different context might apply: "I wasted time, and now doth time waste me."10

End Notes

1. 56 Mass. App. Ct. 466 (2002).[back]

2. Apparently neither Wardle nor Kessler dealt directly with the other, instead acting through their respective brokers. The offer to purchase was signed by Wardle's attorney and by Kessler's broker, each "as agent."[back]

3. The trial judge also concluded that the purchase and sale agreement proffered by Patten was essentially in full compliance with the terms of the offer to purchase. The Appeals Court did not consider this finding.[back]

4. See Owen, 56 Mass. App. Ct. at 470.[back]

5. 429 Mass. 84 (1999).[back]

6. 370 Mass. 828 (1976).[back]

7. See Owen, 56 Mass. App. Ct. at 470.[back]

8. Anthony's Pier Four, Inc. v. HBC Associates, 411 Mass. 451, 471 (1991) quoting Drucker v. Roland Wm. Jutras Assocs., 370 Mass. 383, 385 (1976).[back]

9. See Owen, 56 Mass. App. Ct. at 470 n.7.[back]

10. William Shakespeare, Richard II, act V, sc. V, 49.[back]

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