What happens if a delayed Settlement deadline falls on a holiday?

QUESTION: Let’s assume the seventh day of the delay period for Settlement/Closing in paragraph 12 of the Offer to Purchase and Contract (Form 2-T) falls on a holiday, thus making it impossible to close that day. Can the parties close on the next available business day without the delaying party being in breach?

ANSWER: Technically speaking, no.

Paragraph 12 of Form 2-T permits a seven-day delay in Settlement/Closing and requires the delaying party to give the non-delaying party notice. Paragraph 22 of Form 2-T sets out how days and times in the contract must be calculated. Importantly, this paragraph states that: “Unless otherwise provided, for purposes of this Contract, the term ‘days’ shall mean consecutive calendar days, including Saturdays, Sundays, and holidays, whether federal, state, local or religious.” Holidays are therefore counted as “days” for the purpose of calculating a deadline in Form 2-T, including the date on which the seven-day delay period for Settlement/Closing ends. On the eighth day, the non-delaying party has a right to terminate the contract and seek any remedies available for breach of contract in Form 2-T.

Brokers should keep this in mind when negotiating a Settlement Date so that in the event of a delay, the seventh day is a working day. Of course, if the parties wish to give a short extension to accommodate the holiday, they can execute an Agreement to Amend Contract (Form 4-T) to extend the Settlement Date. Be sure to check the box below the amended Settlement Date in Form 4-T if the parties wish to shorten the delay period from seven days to four days.