Multiple Choice Question: It’s that holiday-filled time of year again, when you might need a refresher on handling a Notice to Buyer to Perform (NBP). The most common situation is when a seller serves a 2-day NBP requiring the buyer to remove contingencies under the terms of C.A.R.’s Residential Purchase Agreement (RPA). Which of the following statements concerning that situation is false? Pick the best answer:

A. A seller can serve the NBP on a legal holiday.
B. If the service of the 2-day NBP occurs on “Day Zero,” and you are in the process of counting out Day 1 and Day 2 after such service, you should not count weekends or legal holidays as either Day 1 or Day 2.
C. A buyer does not need to remove applicable contingencies on a weekend or legal holiday.
D. If a buyer fails to remove contingencies as required by an NBP, the seller can cancel on a legal holiday. 

Answer: Answer A is a true statement, so it’s not the correct answer. A seller can serve an NBP to remove contingencies starting “2 Days” before the end of the buyer’s contingency period (see paragraph 14E of the RPA). That capitalized word, “Days,” is specifically defined in the RPA as “calendar days” (see paragraph 25J), which includes weekends and legal holidays. Additionally, we should exclude weekends and legal holidays for any “act required by” the RPA (as further discussed below). But the seller’s service of an NBP is voluntary. It is not an “act required by” the RPA.

As an example of Answer A, let’s say that, according to the parties’ contract, the buyer’s contingency period ends on Wednesday, December 27, 2023. The seller can serve the NBP as early as December 25, 2023, even though that’s Christmas Day (and a legal holiday). Alternatively, let’s say that the buyer’s contingency period contractually ends on Christmas Day, December 25, 2023. The seller can serve an NBP as early as Saturday, December 23, 2023, regardless of whether December 23, 2023 is a weekend day, or December 25, 2023 is a legal holiday.

Answer B is a false statement, so it’s the correct answer. When you’re counting out the 2 days after service of an NBP, you do not skip over weekends and legal holidays. Let’s say, for example, that a seller serves an NBP on Friday, December 29, 2023, which would be “Day Zero.” According to Answer B, which is wrong, you would skip over December 30, 2023 and December 31, 2023, because that’s the weekend, and you would also skip over Monday, January 1, 2024, which is New Year’s Day and a legal holiday. You would then count Tuesday, January 2, 2024, as Day 1, and Wednesday, January 3, 2024, as Day 2. Again, this is wrong.

Instead, when a seller serves an NBP on December 29, 2023, the proper way to count days is to consider Saturday, December 30, 2023, as Day 1, and Sunday, December 31, 2023, as Day 2. But the buyer’s removal of contingencies by Day 2 is an “act required by” the RPA. The reason is, if the buyer does not remove contingencies by Day 2, the seller can cancel. Because the buyer’s removal of contingencies is an “act required by” the RPA, the buyer need not perform on a weekend or legal holiday. The buyer can wait until the next business day, or Tuesday, January 2, 2024, to remove applicable contingencies. See the definition of “Counting Days” in paragraph 25.I. of the RPA.

Answer C is a true statement as explained above, so it’s not the correct answer. Upon the service of an NBP, the buyer’s removal of applicable contingencies is an “act required by” the RPA. Hence, the buyer is not required to remove such contingencies on a weekend or legal holiday, and can wait until the next business day (see paragraph 25.I. of the RPA).

Answer D is also a true statement, so it’s not the correct answer. If a seller serves a 2-day NBP, and the buyer fails to perform, the seller can cancel. The seller, however, is not required to cancel. Because the seller’s cancellation is not an “act required by” the RPA (under paragraph 25I), the seller can cancel on a weekend or legal holiday.

Copyright© 2023 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of December 11, 2023. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.