- In ordinary contract law, a missed deadline doesn't automatically end an agreement — the other party often just has to give reasonable notice and a further chance to perform.
- Most standard-form agreements of purchase and sale used across Ontario include a time-is-of-the-essence clause as a matter of course.
- One party isn't ready to close — commonly because financing, a mortgage discharge, or a document isn't in place.
Tucked into the boilerplate of almost every Ontario Agreement of Purchase and Sale is a short clause that carries outsized legal weight: time is of the essence. Most buyers and sellers skim past it without a second thought — until a closing date is at risk, and suddenly it's the only clause that matters.
This phrase isn't decorative language. It's a legal mechanism that turns the dates in your agreement — the closing date, condition deadlines, irrevocability dates — into strict, enforceable deadlines rather than approximate targets.
This article explains what the clause actually does, what happens when a deadline is missed, and how deadlines can be changed without derailing the deal.
What the Clause Actually Does, Legally
In ordinary contract law, a missed deadline doesn't automatically end an agreement — the other party often just has to give reasonable notice and a further chance to perform. A "time is of the essence" clause changes that default. It makes every date in the agreement a fundamental term, meaning that missing one — even by a short period — can allow the other party to treat the agreement as breached, rather than merely late.
Why It's in Almost Every Standard Agreement
Most standard-form agreements of purchase and sale used across Ontario include a time-is-of-the-essence clause as a matter of course. It exists to give both sides certainty: a seller who's relying on the sale proceeds to buy their next home, or a buyer who's given notice on a rental unit, needs to know the closing date is firm, not aspirational.
What Happens If a Closing Date Is Missed
- The deadline passes without completion. One party isn't ready to close — commonly because financing, a mortgage discharge, or a document isn't in place.
- The non-breaching party has options, not obligations. They aren't forced to terminate; they can choose to treat the contract as at an end, or they can choose to proceed and pursue other remedies.
- If the deal is terminated, the breaching party may be at risk of losing their deposit, if they're the buyer, or facing a claim for damages, depending on the circumstances and the agreement's terms.
- If both sides still want to close, they can agree — in writing — to extend the date, which effectively resets the clock without ending the agreement.
None of this happens automatically in every case; how a specific breach plays out depends on the wording of the agreement, the reason for the delay, and how the other side chooses to respond.
Extending or Waiving the Clause
Because time-is-of-the-essence is a contractual term, the parties can change it the same way they created it — by mutual written agreement. A short extension, documented as an amendment signed by both sides, is common when a closing is delayed by a lender, a title issue, or a chain of related closings. Without that written amendment, though, the original deadline generally still governs.
One side generally cannot unilaterally waive the other's right to rely on the clause — an extension needs to be agreed, not just assumed because the delay seems minor.
Practical Steps If You Think You'll Miss Closing
- [ ] Tell your lawyer as soon as a delay looks likely — not the day before closing
- [ ] Don't assume the other side will be flexible just because the delay seems small
- [ ] Get any extension in writing, signed by both parties, before the original deadline passes
- [ ] Understand what happens to your deposit if the deal falls through because of the delay
- [ ] If you're the seller and the buyer is late, talk to your lawyer before deciding whether to terminate or extend
Frequently asked questions
Can a few hours' delay really end my deal?
In principle, yes — because the clause makes the date a strict term, not an approximate one. In practice, many short delays are resolved cooperatively between the lawyers acting for both sides, especially where the delay is due to routine funds-transfer timing. But there's no guarantee the other party has to be accommodating, which is exactly why the clause has teeth.
Does the clause apply to condition deadlines too, or only the closing date?
It typically applies to every date in the agreement, including irrevocability dates and condition waiver deadlines — not just the final closing date. Missing a condition deadline can have consequences for whether that condition is treated as fulfilled or the deal is at an end, depending on how the clause is drafted.
What if the delay isn't my fault — say, my lender is slow?
The clause generally doesn't distinguish between a delay you caused and one caused by a third party like a lender or a law firm on the other side of a related closing. The practical fix is the same either way: flag the risk early and try to get a written extension before the deadline passes.
Can I just build in a longer closing date to avoid this problem?
A realistic closing date, with some buffer for financing and document preparation, reduces the odds of a problem — but it doesn't eliminate the clause's effect if something still goes wrong on the day. Your lawyer can help you assess whether your proposed timeline is realistic given your financing and moving circumstances.
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