Legal FAQs for REALTORS® — Contracts and Forms
Effective Date

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If the effective date is not filled in, does that mean that there is no contract? (Updated June 4, 2014)

No. By signing the forms, the parties have instructed the broker to fill in the final date of acceptance as the effective date. If the broker failed to fill in the effective date, the broker may be placed in the precarious position of later having to determine the effective date of the contract. The final date of acceptance is a fact issue that must be resolved either by the parties with the assistance of the brokers or, ultimately, a court of law.

How do I determine the effective date? (updated June 11, 2014)

The effective date is determined by the final date of acceptance. The final date of acceptance is the date on which the contract becomes binding between the parties. It is the date that both buyer and seller have agreed to all terms of the contract and have executed the contract. Four elements must be satisfied for final acceptance to take place:

1. The final contract must be in writing. (This is typically satisfied when negotiations are made using promulgated forms.)
2. The buyer and seller must sign the final contract, including the initialing of any handwritten changes to the initially drafted offer, if applicable.
3. Acceptance must be unequivocal.
4. The last party to accept must communicate acceptance back to the other party or the other party’s agent, if applicable.

The effective date is the date when the last element (communicating acceptance back) is made after the other three elements are satisfied. One reason why communicating acceptance back to the other party is mandated is so the other party will know when the contract performance requirements or periods for performance begin.

I am confused about the effective date in TAR's commercial contracts. The TREC contracts provide a place to insert the executed date of those contracts, and this date is defined in the contract as the "Effective Date." There is no similar place for the brokers or the parties to insert such a date in the commercial contracts. (May 6, 2004)

The commercial contracts address the matter of the effective date in paragraph 24. The task force of commercial practitioners working on these contracts felt that because of the way that many commercial contracts are negotiated it would be appropriate to provide that the time for performance of the parties should not begin until the escrow agent receipts the contract after all parties have signed. This was done to allow for delays often experienced in commercial transactions in getting the contract to the escrow agent and to allow the parties to not have to begin performance obligations until the contract was escrowed. This means that for "the purpose of performance of all obligations" the clock does not start running for the parties until the contract has been receipted by the escrow agent. This does not mean that there is no enforceable contract prior to the receipt by the escrow agent. To the contrary, the law of offers and acceptance would still control and there would be an "enforceable" contract under the statute of frauds when the last party to accept all of the terms of the contract signs the contract and communicates that acceptance and signing to the other party. Thus, while the date for the beginning of performance is handled in a different way in the commercial contracts than in the TREC contracts, the law regarding when there is an enforceable contract is the same for both. It should also be noted that the Escrow Receipt at the end of the commercial contracts has a parenthetical reference that the day of the receipt of the contract is the "effective date."

Who determines the effective date? (updated June 4, 2014)

The contract forms instruct the broker—either the listing broker or the buyer’s broker—to fill in the final date of acceptance as the effective date. It might be a good idea for both brokers to confirm the effective date between themselves when communicating final acceptance.

On Saturday evening, the listing agent notifies the buyer's agent that the seller accepted the offer from the buyer. The seller accepted the offer unequivocally and signed the contract. The buyer's agent informs the listing agent that he will not be able to notify the buyer of the acceptance until Monday. Should the brokers insert Monday as the effective date? (updated Jan. 1, 2002)

No. Under these facts the elements of final acceptance are satisfied on Saturday.

How important is it for the effective date of the contract to be filled in? (updated Jan. 1, 2002)

The effective date is the most crucial date in the contract. It is the date from which most, if not all, performance periods are measured. One of the most significant complaints that escrow agents make about real estate licensees is that, many times, licensees fail to insert the effective date in the contract.

When calculating the time for performance under the promulgated forms, is the effective date included as the first day? (Updated June 4, 2014)

No. Here is an example: The buyer has the right to terminate the contract within five days after the effective date, and the effective date is January 1. The buyer may terminate the contract at any time until 5 p.m. on January 6. Note that January 2 is the first day after the effective date.

If the broker fails to insert the effective date, may the parties later execute an amendment that establishes the effective date? (updated Jan. 1, 2002)

Yes. The parties may establish in writing the effective date.

If the broker fails to insert the effective date, may the parties rely on the date that the contract is delivered to the escrow agent as the effective date? (updated Jan. 1, 2002)

Not necessarily. The date of receipt of the escrow agent is evidence that the effective date of the contract is, most likely, on or before that date, but is not conclusive as to the effective date.

Would the answer have been the same, if there had been no buyer's agent and, instead, the buyer was working directly with the listing agent? (updated Jan. 1, 2002)

No. In this case, the effective date is the date the buyer is informed that the seller accepted the offer.

Can you give an example of determining the effective date? (updated June 4, 2014)

The buyer makes a written offer through his agent to the listing agent on May 15. The listing agent delivers the offer to the seller on May 16. The seller signs the offer as submitted on May 17 and delivers the signed offer to the listing agent on May 18. The listing agent emails the executed contract to the buyer's agent on May 19. The buyer's agent calls the buyer on May 20 and informs the buyer that the seller has accepted the offer.

The effective date in this example is May 19, the date the listing agent communicated to the buyer's agent that the seller signed and unequivocally accepted the buyer's offer.

Legal Disclaimer: The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on Any legal or other information found here, on, or at other sites to which we link, should be verified before it is relied upon.

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