The Financing Approval Deadline, and What Lapsing Means

The deadline is not in the contract

¶3B of the contract describes the financing and ¶22 has a checkbox for the Third Party Financing Addendum. The termination window itself is a blank in ¶2A of that addendum. A file with the box checked on ¶22 and no 40-11 in it has no computable financing deadline at all.

Buyer Approval

40-11 ¶2A, first box: the contract is subject to the buyer obtaining Buyer Approval. If the buyer cannot obtain it, the buyer may terminate within ___ days after the Effective Date of the contract by giving the seller (i) notice of termination and (ii) a copy of a written statement from the lender setting out the reasons for the lender's determination. Terminating that way refunds the earnest money to the buyer.

The addendum defines when the approval is reached: Buyer Approval is deemed obtained when the terms of the loans described are available and the lender determines the buyer has satisfied all of the lender's requirements related to the buyer's assets, income, and credit history.

¶2A also has a second box: this contract is not subject to buyer obtaining Buyer Approval. When that one is checked there is no buyer-side financing exit to compute.

What lapsing means

The 40-11 says it plainly: if the buyer does not terminate the contract under Paragraph 2A, the contract shall no longer be subject to the buyer obtaining Buyer Approval.

Nothing fires. No notice goes out, no box changes, no one is told. The contingency simply stops existing on that date, and a buyer who then cannot close is in ¶15 default territory with the earnest money in play.

Time is of the essence, and no weekend rollover

Paragraph 2 of the 40-11: time is of the essence for this paragraph and strict compliance with the time for performance is required.

The Saturday, Sunday, or Legal Holiday extension in contract ¶5A(2) is written for the earnest money, the option fee, and the additional earnest money. It is not in the 40-11 and does not reach the Buyer Approval date. If that date lands on a Saturday, it is due Saturday.

Property Approval

¶2B: if the buyer's lender determines that the property does not satisfy the lender's underwriting requirements for the loan, including but not limited to appraisal, insurability, and lender-required repairs, the buyer may terminate on or before the 3rd day before the Closing Date by giving the seller notice of termination and a copy of the lender's written statement. The earnest money is refunded. If the buyer does not terminate under that paragraph, Property Approval is deemed to have been obtained.

Because it counts backward from the Closing Date, an amendment moving closing moves this date with it.

One carve-out: ¶4 of the addendum, the FHA and VA required provision on appraised value, states that the 3-day notice of termination requirement in ¶2B does not apply to that paragraph.

Moving the Buyer Approval date

Box (9) on the TREC 39-11 amendment changes the date for the buyer to give written notice that Buyer Approval cannot be obtained. Like the rest of the amendment it takes effect when both parties execute it.

Stop counting days by hand

Drop your contract in at recontract.ai and every deadline computes itself: the Effective Date read off the execution block, the option period at 5:00 PM, the 3-day money window with the weekend rule already applied, the financing date off the 40-11, and the Closing Date. It is free, and the file is parsed in your browser.