Stefanie has entered into a contract to purchase a shopping center from Ryan. The contract requires that the closing take place on July 25. Stefanie encounters some problems with obtaining a mortgage loan and does not close on July 25. Is Stefanie in default on July 26? What issues may affect your answer.

Fill in the blank(s) with the appropriate word(s).


Stefanie may or may not be in default on July 26. If the contract contained a financing contingency, obtaining a mortgage loan may have been a condition precedent to Stefanie’s obligation to buy the property. Her failure to obtain a loan excuses her from the obligation to buy. Even if the contact did not have a financing contingency, Stefanie might still not be in default on July 26. Unless the contact provided that time is the essence, July 25 would not have been the absolute date for performance. If the contract did not contain a time-is-of-the-essence clause, then Stefanie would be given a reasonable period of time after July 25 to buy the property before she would be in default.

Legal Studies & Paralegal

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