WOrds "You're out of contract" on dark backgroundEvery region of the country has some unique real estate vocabulary and phrases.  Here, in Silicon Valley, when we say “you’re out of contract“, it’s another way of saying “you are not doing what you promised to do in the purchase agreement that you signed” (meaning the real estate contract).  In other words, there is a seller or buyer default happening.

Both sellers and buyers make promises to do certain things and most of these promises are tied to time frames or dates.  Here are a few of these time-sensitive promises or contractual obligations:

  • sellers agree to leave the utilities on until close of escrow
  • sellers promise to maintain the home until close of escrow as it was on the day the property went into contract (so mow the lawn, water it etc.)
  • buyers assert that they will get their initial deposit to title within a set number of days (the California Association of Realtor’s form states 3 business days or provides a blank to fill in an alternate number – it’s often 1 business day here)
  • buyers promise to remove contingencies within the times they stipulated in the offer
  • sellers will move out in according to the date set out in the contract
  • buyers agree to take possession (move in) per the time/day agreed to in the purchase agreement (not before)
  • sellers bind themselves to having repairs done in a certain manner (depends on contract and clauses, if promised)

At one time or another, I have seen all of these items not adhered to by the parties who were supposed to make good on their word, and stranger violations that I don’t want to write about here lest I give someone a bad idea. I have seen sellers not move out on time (in some cases, elderly sellers who grossly misjudged the effort required to vacate.)  The failure to do so causes stress and anxiety, and sometimes worse: fear and anger.

Being a day late on a promise may not cause the escrow to close late, but it will put a strain on the relationship between buyer and seller. Being out of contract on several things can fray nerves and force the other party into what feels like a corner.  That’s never good. Buying and selling homes is a very stressful experience, without one party or the other dragging feet and adding to the angst.

Problems, of course, can occur that aren’t the buyer’s fault or the seller’s fault.  Sometimes these slow down a process and can trip us up a little.  But don’t ignore it or pretend it doesn’t matter.  Instead, communicate.  Often a phone call or an email explaining the problem will do wonders.  If the delay is more than a day, consider requesting an extension in writing through an addendum.  Talk to your Realtor or broker to see what is the wisest thing to do.  Above all, do your best to “perform on time” so no one ever needs to say to you that “you’re out of contract!”

Read more about being out of contract and defaults at this article of mine elsewhere on this site:

What is a default in a real estate transaction or contract?

More reading on contracts:

If it’s in the real estate contract, your lender will ask for it

Does the contract count calendar days or business days?




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Mary Pope-Handy
Sereno Group Real Estate
214 Los Gatos-Saratoga Rd
Los Gatos, CA 95030
408 204-7673
Mary (at) PopeHandy.com
License# 01153805

Selling homes in
Silicon Valley:
Santa Clara County,
San Mateo County, and
Santa Cruz County.
Special focus on:
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Saratoga, Campbell,
Almaden Valley,
Cambrian Park.
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