Time of the essence means that a failure to perform an obligation by the date specified for that obligation is likely to be (a) a material breach of the agreement (b) strictly enforced by a court of equity. Marioni, 374 N.J. Super. At 603; Gorrie v. Winters, 214 N.J. Super. 103, 107 (App. Div. 1986).) For example, if the agreement contains a time of the essence clause for a specified closing date, it means that if either party were not ready to close on the specified date, the breaching party is then in default provided that the other party shows that it was ready, willing, and able to close title on the time of the essence date. (Gorrie, 214 N.J. Super. at 104-08).
In New Jersey, the most commonly used residential purchase and sale agreement is the Statewide New Jersey Realtors Standard Form of Real Estate Sales Contract (“Broker Form” and/or “Contract”). This Broker Form includes a time of the essence clause. If a party does not wish to include this clause in the Broker Form, counsel should amend the contract during the attorney review period. Furthermore, New Jersey courts generally presume against time being of the essence in a purchase and sale agreement unless the agreement expressly (a) provides for an obligation (for example, the closing date) to be held on a definitive day (b) at a definitive time and place (c) and includes the words “time is of the essence.” Orange Soc. of New Jerusalem v. Konski, 94 N.J. Eq. 632, 635 (Ch. 1923), aff’d, 95 N.J. Eq. 254 (1923), Paradiso v. Mazejy, 3 N.J. 110, 113 (1949).
When a closing date is specified in a purchase and sale agreement it is understood as a mere formality and without more the date is an estimated date. (Orange Society, 94 N.J. Eq. at 635). This is because it is difficult to determine with any degree of certainty the amount of time both the seller and the purchaser require to prepare for closing and address unanticipated circumstances. (Orange Society, 94 N.J. Eq. at 635).