There are many important dates during the course of a real estate transaction, but by far, the most crucial one is the effective date. Why? Read on to learn more!
What is the effective date?
It is the date from which all performance periods are measured. Once the contract is signed by both parties, with substantial information to complete it, it begins. It is essentially day zero and all actions after are measured from this date.
Note- this is not the date that all the paperwork is done. There are always a few documents that take a little longer to complete, so it begins when the contract is substantially complete, agreed upon by both parties and signed.
How is an effective date determined?
There are four elements that must be completed for a final acceptance to take place. The effective date is determined when the last element is executed.
- The final contract must be in writing.
- Both buyer and seller must sign the final contract (including initialing of any handwritten changes to the drafted offer, if applicable).
- Acceptance must be clear.
- The last party to accept must communicate acceptance back to the other party (or the other party’s agent).
Why is the effective date so important?
As stated above, this date is used to measure all future actions. The real estate transaction starts with this date.
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