Most state courts, including the Nevada Supreme Court, recognize and enforce the integrity of "time is of the essence clauses." The Nevada Supreme Court recognizes that at common law a tender of money, which a party is bound to pay at a certain time and place, must be made on the day fixed for payment, and not thereafter, and that relief against forfeiture will not be granted where time of performance is made essential by the express terms of the contract, stating, "[a] court of equity has no more right than a court of law to dispense with an express stipulation of the parties in regard to time in contracts of this nature." In one case the Nevada Supreme Court did rescue the defaulting purchaser from the harsh forfeiture of foreclosure of the "installment purchase agreement" whereby, the installment purchaser (the equitable owner) was in default of a mere $63.75 in tax payments and interest, and the seller had attempted to foreclose the equitable interest of the purchaser, pursuant to a harsh and inequitable forfeiture clause. Many times the court will rescue the defaulting purchaser, as it has done in many "equitable conversion" type cases that arise under installment purchase agreements, to avoid harsh, unjust forfeitures.
"Equitable conversion" cases are those where the purchaser is purchasing property on an installment "contract for deed." In such cases, even though the deed and "legal title" may not be delivered until all payments have been made, the "equitable title" is held by the purchaser in the interim. In one often cited contract for deed purchase, the Nevada Supreme Court rescued the purchaser from total forfeiture of the property, allowing the purchaser a reasonable time to cure, in spite of a time is of the essence clause, because the default was minor in comparison to the substantial forfeiture that would have occurred if the court had not rescued the buyer in equity. In Slobe, the installment purchaser was granted a reasonable time to cure an $8,320.28 default in light of the substantial $90,000 investment into the motel in dispute. The courts have been willing to rescue purchasers from harsh forfeitures when they have taken legal, peaceful possession, and enhanced the property, and/or made substantial payments thereon. However, in non-equitable conversion cases, the courts have not been so willing to rescue, and will require strict compliance with the "time is of the essence" provision. The Nevada Supreme Court has held that, [t]he rule is well established that in order for a purchaser to successfully sue a vendor for damages for breach of a contract for the sale of land, the purchaser must show that he has performed all conditions precedent or concurrent, or that such performance has been excused.
Even surrounding states' appellate court decisions hold identically with Nevada case law, that a seller of real property, pursuant to a real estate purchase agreement, is justified in canceling the escrow if the purchaser has failed to perform a material part of the contract which is a condition concurrent or precedent to the seller's obligations to perform. In one instance the purchaser of real property tendered his performance three hours beyond the specified time for performance. The appellate court ruled that the purchaser was in breach and not entitled to specific performance, because the "time is of the essence" clause and plain language contained in that purchase agreement caused the contract to expire precisely three hours prior to tendered performance.
It has been held that if neither party tenders performance by the date set for closure under a contract that provides time is of the essence, the duties of both parties are discharged by passage of that date.
Where the escrow agreement specifies a definite time for performance, performance must be made within the time limit of the agreement, and the escrow agent is without power to deliver a deed thereafter. It is well settled that performance must be made within the time limit of the escrow agreement.
The Nevada Supreme Court recently held that, "this court will not rewrite the parties' contract and will require strict compliance with the 'time is of the essence' provision.
Thus, Realtors, lawyers, and purchasers beware: the "time is of the essence" clause is still alive and well in Nevada and surrounding states. Most courts will rely on this clause and longstanding precedents to deny any relief to a late purchaser, based upon the sound legal principle that a purchase agreement expires by its own terms and will not be rewritten or extended by the court. The exception to the rule is applied to prevent a harsh, inequitable forfeiture where a defaulting installment-contract purchaser is rescued from a harsh forfeiture which would not be justified by a relatively minor breach which could be cured within a reasonable time. In such cases the laws of equity will intervene to promote fairness and to avoid the harsh, inequitable forfeitures that would otherwise result through a strict application of "time is of the essence" clauses. In such cases the courts have favored an action for damages over a full forfeiture of a substantial equitable interest.
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