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How to Count “Days”

by | Jun 16, 2023 | Contracts and Forms, Forms, Uncategorized

BROKER RISK MANAGEMENT

WEEKLY PRACTICE TIP

Scenario 1:  I am confused as to how to count “days”.  Is the first day the day the contract is Accepted or is the next day the first day?  And, when a Notice to Perform is given, how are those days counted?  What is a “legal holiday?”

Scenario 2:  I occasionally use the PRDS or SFAR purchase agreement forms.  How are days counted for purposes of those contract forms?

RESPONSE:  Counting days is a source of confusion and the answer depends, in part, on which purchase agreement form you are using.  This Tip focuses primarily on the CAR RPA; however, the PRDS and SFAR purchase agreement forms are also discussed below.

  1. GENERAL RULES:
  1. The general rule is that when a contract is accepted (which is the date that the last party signed an unchanged offer or counteroffer and the contract is delivered to the other party or their designated agent) that is Day ZERO. The next day is DAY 1 for the purpose of counting the days for removal of contingencies, providing disclosures/documents, and other contractual obligations such as the Close of Escrow.  For example, Buyer submits an offer and seller accepts it without a counteroffer.  Once the listing agent emails the fully executed contract to the buyer’s agent, the contract is deemed accepted.
  1. When delivering a notice to the other party (such as a Notice to Perform), the day that the Notice or Demand is delivered to the other agent or party is Day ZERO, and the next day is DAY 1 for purposes of counting the days for the other party to respond. For example, if a contract is accepted on June 1, June 1 is day zero and June 2 is day 1.
  1. The time of day (e.g., 3:00 p.m.) that a contract is accepted or a Notice is Delivered is NOT relevant, because time frames are not calculated based on hours, but only on full 24-hour Days.
  1. The CAR purchase agreement forms have a definition of “legal holiday.” Both the PRDS and SFAR purchase contacts reference “legal holiday” but without a definition.
  1. CALIFORNIA ASSOCIATION OF REALTORS’® PURCHASE AGREEMENT FORMS
  1. COUNTING DAYS: The CAR Purchase Agreement forms have specific rules regarding how days are counted.  These rules are set forth in ¶ 25.I of the RPA which states: “Days” means calendar days.  However, delivery of deposit to escrow is based on business days.”  ¶ 25.I(4) states:

After Acceptance, if the Scheduled Performance Day for any act required by this Agreement, including Close Of Escrow, lands on a Saturday, Sunday, or Legal Holiday, the performing party shall be allowed to perform on the next day that is not a Saturday, Sunday or Legal Holiday (“Allowable Performance Day”), and ending at 11:59 pm. “Legal Holiday” shall mean any holiday or optional bank holiday under Civil Code §§ 7 and 7.1, and any holiday under Government Code § 6700.

NOTE:  For a list of Legal Holidays see tip: “2301006 Legal Holidays.”

However, after Acceptance, the last Day for performance of any act required by this Agreement (including Close of Escrow) shall not include any Saturday, Sunday, or legal holiday and shall instead be the next Day.”

This means that you ALWAYS count ALL days including weekends and holidays when counting days.  However, the LAST DAY FOR PERFORMANCE cannot be on a Saturday, Sunday, or Holiday.

NOTE:  Per 14E, the required time frame for performance when giving a Notice to Buyer to Perform (NBP) or Notice to Seller to Perform (NSP) is at least 2 DAYS (not 48 hours) after the Notice is Delivered.   This 2 Day notice cannot be shortened, but can be lengthened in the NBP/NSP by the party preparing and delivering the NBP/NSP.  The NBP/NSP cannot be delivered to the other party more than 2 days prior to the due date for performance.

Per 14G, the required time frame for performance when giving a Demand to Close Escrow (DCE) is at least 3 Days after the Demand is Delivered. This 3 Day notice cannot be shortened, but can be lengthened in the DCE by the party preparing and delivering the DCE. Note that the DCE cannot be delivered to the other party more than 3 days prior to the due date for the close of escrow.

Days are then counted as specified in Section 1B above, and those Days go until 11:59 p.m. (essentially midnight).

Close of Escrow Exception:  CAR RPA paragraph 25.I(5) states that if the date for the close of escrow falls on a day “that the Recorder’s office in the County where the Property is located is closed or any day that the lender or Escrow Holder under this Agreement is closed, the COE shall occur on the next day the Recorder’s office in that County, the lender, and the Escrow Holder is open.”

 

  1. EXAMPLES OF COUNTING DAYS IN A CAR PURCHASE AGREEMENT

Example 1:  If, on a Wednesday, Seller issues a Notice to Buyer to Perform to remove contingencies, that day is Day ZERO.  Thursday is DAY 1.  Friday is DAY 2.  If the applicable contingencies are not removed by midnight Friday, the Seller can issue a cancellation notice on Saturday.

Example 2:  If, on a Thursday, the Seller issues a Notice to Buyer to Perform to remove contingencies, that day is Day ZERO.  Friday is DAY 1 and Saturday is DAY 2.  But, the last day for performance cannot be on a weekend or holiday, so the last day for performance is extended to Monday (unless Monday is a holiday and then the last day is extended to Tuesday).  If Monday is not a holiday, the applicable contingencies are not removed by midnight Monday, the Seller can issue a cancellation notice on Tuesday.

Example 3:  If, on a Saturday, Seller issues a Notice to Buyer to Perform to remove contingencies, that day is Day ZERO.  Sunday is DAY 1.  Monday is DAY 2 (unless Monday is a holiday).  Then, if the applicable contingencies are not removed by midnight Monday, the Seller can issue a cancellation notice on Tuesday.

Example 4:  The Buyer’s offer expires by default 3 days after all Buyer signature(s) (unless a different time if modified in Paragraph 3C “Expiration of Offer”). But note that the time frame is specified as “after” the offer was signed by Buyer(s)” not after it is Delivered to anyone.  If the Buyer signed the offer on Thursday, the third day will be Sunday.  The reason for this is that in Paragraph 25I the defined method of counting Days only takes effect after the Acceptance of the Agreement.  Thus, offers and counteroffers can expire on weekends or holidays.

 

Example 5:  If on a Thursday, a Contract is Accepted, the Buyer has 3 Business Days to put the initial deposit into escrow.  Friday is DAY 1, but Monday is DAY 2 and Tuesday is DAY 3.

  1. COUNTING DAYS IN THE PRDS PURCHASE CONTRACT

 

The counting and calculation of all days in this contract are calendar days with the exception of the initial deposit, and several other paragraphs, which are designated as, and are counted in, business days. However, per ¶23A, if the last date for performance (e.g., contingency removal; delivery of disclosures/documents; Notice to Perform [NTP]) falls on a weekend or holiday, the date for performance is extended to the next business day (i.e., a day that is not a weekend or legal holiday).  Per ¶23B, the times for dealing with Requests for Repair are treated differently from CAR forms.

All time frames are specified as starting “from” or “after” an event.  The date that any contract action or event occurs (e.g., Acceptance, removal of contingencies, or for contract performance, the date that an NTP is Delivered) is thus considered “Day ZERO”; the next day is Day 1.  (See PRDS Real Estate Purchase Contract ¶ 29L for definitions of “Days,” and ¶ 29L, 33 and 37 for the definition of “Delivery”)

 

Counting days in the PRDS® Purchase Contract is exactly the same as described above in the CAR Purchase Agreement forms with 3 exceptions:  1) The time frame for Notices to Perform is always 2 Days, there is no flexibility to change that time frame.  However, NTP may be delivered 2 or more days prior to the time for performance, but cannot shorten the time for performance.  2) The Leased/Liened Items Contingency and the Insurance Contingency are counted in Business Days.  3) An NTP is not required for close of escrow.  Paragraph 34 Offer specifies an actual date that the Buyer or Buyer’s Agent must receive the Seller’s signed documents, or the offer is revoked.

 

  1. COUNTING DAYS IN THE SFAR PURCHASE AGREEMENT (Based on the 6/23 Revision)

 

The date that a contract action or event occurs (e.g., Acceptance, Delivery of a Notice to Perform) is considered “Day ZERO” and the next day is Day 1.   All counting and calculation of days are calendar days (with the exception of the initial deposit which is counted in business days). If the date for removal of a contingency, or performance of a contract obligation including Close of Escrow falls on a weekend or holiday, the date is extended to the next business day. Days end at 11:59 PM.  A minimum 2 Day Notice to Perform is required prior to termination of the contract for failure to remove a contingency or take a contract action including close of escrow.  A Notice to Perform can be given no earlier than 2 Days prior to the contractual deadline.

WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS.  This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents.  It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP.  The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.