What is “Tender” in Real Estate? A Summary for When Transactions Stall
As a real estate lawyer, I often see the stress that builds when a closing day arrives and things
aren’t moving as planned. Usually, it’s the seller waiting on the other side of an empty digital
table. When a buyer can’t get their cash together by the deadline, you are faced with a difficult
choice: do you extend the deadline, or do you “tender”?.
Understanding tender is crucial for protecting your interests when a transaction goes
sideways.
Understanding Tender: The “End of the Line”
Tender is the formal process of demonstrating that you are ready, willing, and able to fulfill your
end of the contract, while the other party is not. Effectively, it is the act of terminating the
transaction because the other party failed to perform.
Instead of waiting around and passively accepting the breach of contract, tendering allows you
to say: “We are ready, you are not, and this transaction is now over”.
Why Choose to Tender?
The primary reason to tender is to position yourself for a legal claim for damages. By formally
ending the deal through tender, you can:
● Relist the property: You are free to find another buyer.
● Sue for damages: If you sell the property for less than the original contract price, you can
pursue the original buyer in court for the difference.
● Reject the breach: It signals that you are not simply “waiting around” for the buyer to
eventually find the funds.
The Logistics: How to Tender
To tender properly, your lawyer must complete the steps that would have occurred during a
normal closing to prove you were prepared. This typically involves:
- Preparing all documents: Presenting all the paperwork normally required on closing day.
- Readying the transfer: The lawyer prepares the transfer and ensures all “boxes are
checked” for the closing. - Formal Communication: Sending a specific email or fax (often at the typical 6:00 p.m. deadline) stating that you have done everything necessary, have been waiting all day, and the buyer has
failed to provide the required documents or funds.
A Word of Caution: The Reality of Tendering
While tendering protects your legal rights, it is a “big deal” that shouldn’t be done lightly. Before
moving forward, consider the practical hurdles:
● Starting Over: You will have to relist the property and go through the entire sales process
again, which can take weeks.
● The Deposit Trap: Don’t expect the buyer’s deposit to be released immediately. Most
brokerages will not release those funds without a Mutual Release signed by both parties,
or some sort of legal resolution. This means the deposit often sits in limbo while the dispute is resolved.
Next Steps
If you are facing a closing that isn’t coming together, it is vital to speak to your legal counsel immediately
to weigh the pros and cons of an extension, versus tender. Your lawyer can guide you through the time-pressure, the stress, and the emotions to the correct course of action.
Disclaimer: This post does not constitute legal advice. Every transaction and personal situation is unique.
