Most state courts, including the Nevada Supreme Court, recognize and enforce the integrity “time is essence clause.” The Nevada Supreme Court recognized that under common law, a tender for money, which must be paid by a party at a specified time and place, must be made on the day specified for payment, and not later, and that an acquittal of forfeiture would not be made. given where the timing of performance is made important by the express terms of the contract, which states, “[a] equity courts have no more right than courts of law to issue the parties’ express provisions with respect to timing in contracts of this kind.” In one case, the Nevada Supreme Court saved a defaulting buyer from harsh foreclosure of an “installment purchase agreement” in which, the buyer installments (the fair owner) failed to pay only $63.75 in tax and interest payments, and the seller had attempted to confiscate the buyer’s fair interest, pursuant to a harsh and unfair forfeiture clause. Often the courts will bail out a negligent buyer, as has been carried out in most cases the type of “fair conversion” that appears under installment purchase agreements, to avoid harsh and unfair forfeiture.
A “fair conversion” case is one where the buyer purchases a property on a “contract to deed” installment. In such a case, although the deed and “legal rights” cannot be submitted until all payments have been made, the “fair rights” are retained by the purchaser temporarily. In one oft-cited contract for the purchase of a deed, the Nevada Supreme Court saved the buyer from total foreclosure of the property, allowing the buyer reasonable time to heal, even though time is the essence clause, because the default is small compared to the substantial foreclosure that would occur if the court did not save the buyer in equity. In slobe, the installment purchaser is given reasonable time to settle a default of $8,320.28 in respect of a substantial $90,000 investment into the disputed motel. Courts have been willing to save buyers from harsh forfeiture when they have taken legal, peaceful ownership, and increased property, and/or made substantial payments thereon. However, in the case of an unfair conversion, the courts are not so willing to save, and will require strict adherence to the “time is of the essence” rule. The Nevada Supreme Court has stated that, [t]The rule is well established that in order for the buyer to successfully sue the vendor for damages for breach of contract for the sale of land, the buyer must demonstrate that he or she has performed all of the preceding or concurrent conditions, or that the performance has been excused. .
Even the surrounding state appeals court ruling has similarities to Nevada case law, that the seller of real property, pursuant to a real estate purchase agreement, is justified in canceling escrow if the buyer has failed to perform a material part of the contract which is a concurrent condition or precedes the seller’s obligation to doing. In one example, a real property buyer offered three hours of performance beyond the time allotted for performance. The appeals court ruled that the buyer violated and was not entitled to certain performances, because the “time is of the essence” clause and plain language contained in the purchase agreement caused the contract to expire exactly three hours before the tendered execution.
It has been stated that if neither party bids performance by the date set for closing under a contract that gives time is of essence, the duties of both parties are completed with the passage of that date.
If the escrow agreement specifies a specific time for execution, the performance must be done within the time limit of the agreement, and the escrow agent does not have the power to submit the deed thereafter. It has been agreed that the performance must be done within the time limit of the escrow agreement.
The Nevada Supreme Court recently stated that, “this court will not rewrite the parties’ contract and will require strict adherence to the ‘time is of the essence’ provision.
So Realtors, attorneys, and buyers beware: the “time is of the essence” clause is alive and well in Nevada and surrounding states. Most courts will rely on this clause and old precedent to deny any assistance to a late buyer, based on the strong legal principle that a purchase agreement terminates on its own terms and will not be rewritten or extended by a court. An exception to the rule is applied to prevent harsh and unfair forfeiture where a defaulting installment contract buyer is saved from a serious forfeiture that would not be justified by a relatively minor offense that could be cured within a reasonable time. In such a case, equality laws would intervene to promote justice and to avoid the harsh and unfair plunder that would result through the application of a strict “time is of essence” clause. In such cases, courts prefer redress to full deprivation of substantial fair interests.
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