“Tender” Mercies

In most Agreements of Sale for real estate there is language to the effect that “Tender of an executed deed and purchase money is hereby waived.” Clients sometimes see this and ask about it. Sometimes, more usually in the case of buyers, a client will worry that this means they will not get a deed.

That of course is not the case. A buyer gets a deed if the transaction closes. What this “waiver of tender” means is that certain formalities are waived that would otherwise be necessary to sue a breaching party who fails to close.

For example, in the absence of this waiver, a seller who already knows his buyer is not going to close would, to preserve his right to sue the buyer, still have to prepare and sign a deed, obtain (or at least have escrowed) lien satisfactions and show up at the closing table at the time and place appointed in the Agreement even if he knew (and was affirmatively told) by the buyer a month in advance that the buyer was not closing. Similarly (and this is somewhat hard to fathom) a buyer would theoretically have to show up at the closing table with money in hand, or at least loan documents, in order to sue a seller who the buyer already knew would not be closing.

The waiver of tender or waiver of “formal tender” is a method of clearing away these wasteful and inefficient formalities as a prerequisite to holding a breaching party liable. The suing party no longer has to go through the motions to set up the breaching party’s liability.


Posted in Newsletters, Real Estate / Property