Updated on May 6, 2025

In real estate transactions, deadlines are crucial. Whether you are a buyer or seller, missing a key deadline can lead to serious consequences, including contract termination or financial penalties. One way to ensure strict adherence to deadlines is through a “Time is of the Essence” (TIOTE) clause. This legal provision emphasizes the importance of timely performance and can significantly impact the outcome of a real estate deal.   And, in subsequent litigation the time of the essence provision may make or break a deal.

What is a ‘Time is of the Essence’ Clause and When is it Used?

A “Time is of the Essence” clause is a contract provision that makes the dates and deadlines within an agreement strictly enforceable. If a party fails to meet a specified deadline, they may be considered in breach of contract. TIOTE clauses are commonly included in real estate contracts to ensure that key dates—such as those for deposit payments, inspections, contingencies, and closing—are met without delay.   In California, there is an abundance of case law that deal with TIOTE clauses.  The case law muddies the picture a bit.  But, what is clear is that without a TIOTE clause it may be hard to strictly enforce contract deadlines.   Of course, each case is specific and so is each contract so it is impossible to generalize the law in this area.

These clauses are particularly useful in fast-moving Southern California real estate markets where delays can affect property values, financing terms, and other agreements dependent on timely completion. They are also beneficial when buyers or sellers have contingent obligations, such as coordinating the sale of another property or securing a loan within a set timeframe.

Requirements for Enforcing a Time is of the Essence Clause

For a TIOTE clause to be enforceable in Southern California, the following requirements must be met:

• Clear and Express Language: The contract must explicitly state that time is of the essence.
• Mutual Agreement: Both parties must acknowledge and agree to the clause.
• Reasonable Deadlines: Courts may scrutinize deadlines to ensure they are not unreasonably short or unfair.
• Notice of Breach: If a party misses a deadline, the other party may be required to provide notice before taking legal action.
• State Law Compliance: Different states interpret and enforce TIOTE clauses differently, which can impact their effectiveness.

Example of a Time is of the Essence Clause

A standard TIOTE clause in a real estate contract may read as follows:

“Time is of the essence with respect to all dates and deadlines set forth in this Agreement. Failure to perform any obligation within the time specified shall constitute a material breach of this Agreement and may result in termination of the contract or other legal consequences.”

Time is of the Essence for Buyers in Southern California

For buyers, a TIOTE clause means they must act swiftly to:

• Submit earnest money deposits on time.
• Complete inspections and due diligence within the agreed period.
• Secure financing before the deadline.
• Close the transaction on the designated date.

Failure to meet these deadlines could result in losing their deposit, missing out on the property, or facing legal action from the seller.  Of course, in California with contingent deals most residential contracts requires a notice to perform before you can enforce a time deadline based on the California Association of Realtor’s Standard Residential Purchase and Sale Agreement.

Time is of the Essence for Sellers in Southern California

For sellers, a TIOTE clause holds them accountable for:

• Making required repairs within specified timeframes.
• Providing necessary disclosures and documentation by the agreed dates.
• Ensuring they are prepared to close on the scheduled date.
• Closing escrow
• Delivery a deed or other closing documents to escrow.

If a seller delays beyond the specified deadlines, the buyer may have grounds to terminate the contract, sue for damages, or enforce the agreement through specific performance.

Pros and Cons of a Time is of the Essence Clause

Pros:

• Ensures efficiency and timely performance.
• Provides clear consequences for missed deadlines.
• Helps prevent unnecessary delays that could affect financing or other transactions.

Cons:

• Can lead to contract termination over minor delays.
• May create legal disputes if deadlines are missed due to unforeseen circumstances.
• Some states impose strict interpretation, while others may allow for leniency in enforcement.

Reasonable Postponement

Even with a “Time is of the Essence” clause, there are circumstances where a reasonable postponement may be necessary. Courts may allow a delay if unforeseen events—such as natural disasters, lender processing delays, or other uncontrollable factors—make it impossible to meet a deadline. In such cases, the affected party must typically provide prompt notice and evidence of the issue causing the delay.

Negotiating a reasonable extension can prevent a breach of contract while maintaining the integrity of the agreement. However, the specific terms of postponement should be clearly defined within the contract to avoid disputes.

The Time is of the Essence Clause in California vs. Other States

In California, courts generally do not assume that time is of the essence in real estate contracts unless explicitly stated. This contrasts with states like New York and Florida, where TIOTE clauses are more rigidly enforced.

Additionally, in California, even with a TIOTE clause, courts in rare instances may allow some flexibility in cases where a minor delay does not materially impact the contract.  Often, this depends on the parties’ course of conduct or arguments about waiver of the TIOTE clause. This means that parties in California real estate transactions should carefully draft their contracts to ensure enforceability while considering potential judicial leniency.  Of course this is case specific and contract specific.  At Schorr Law, we have successfully won multi-million dollar cases by enforcing the TIOTE clauses even with minor delay.   This really depends on the case.   We have at least two recent examples of cases we have won on summary judgment where the other party failed to meet the contract deadline.

Disputes Arising from a Time is of the Essence Clause

Disputes over TIOTE clauses often arise when one party believes they should be granted an extension due to unforeseen circumstances, while the other insists on strict adherence to the deadlines. These disputes can lead to contract terminations, loss of deposits, or even lawsuits for breach of contract and specific performance.

If you are involved in a real estate transaction and are facing a dispute over a “Time is of the Essence” clause, it’s crucial to seek legal guidance. The Los Angeles real estate attorneys at Schorr Law specialize in purchase and sale disputes and can help protect your rights and navigate complex contract issues. Contact us today at (310) 954-1877 or visit our contact page to see if you qualify for a free consultation.

We have successfully litigated these before and can litigate it for you!