What Is the Commitment Date?
In standard Florida real estate transactions, a buyer using a mortgage is protected by a "financing contingency." This contingency allows the buyer to cancel the contract and get their earnest money deposit back if the bank refuses to lend them the money. However, this protection is not open-ended. It expires on the commitment date (or loan approval date).
The commitment date is a strict deadline (usually 30 days after the contract is signed). By this specific day, the buyer must receive a formal "Commitment Letter" from their bank. This letter is the bank's official promise that they have reviewed the buyer's credit, appraised the home, and are legally committing to fund the loan.
The Danger of Missing the Deadline
The commitment date is arguably the most dangerous deadline for a buyer. If the commitment date is October 15th, and the buyer does not have their formal loan approval by 5:00 PM on that day, one of two things must happen:
- The Buyer Cancels — The buyer must notify the seller that their loan was denied, cancel the contract, and take their deposit back.
- The Contingency is Waived — If the buyer says nothing and lets the deadline pass, their financing contingency vanishes. They are now legally obligated to buy the house, even if the bank denies the loan on October 16th. If they cannot come up with the cash to close, they will be in breach of contract and will lose their entire earnest money deposit to the seller.
Extensions and Addendums
Banks are notoriously slow. If the commitment date is approaching and the bank is still processing the paperwork, the buyer's attorney must urgently draft a contract addendum asking the seller to extend the commitment date. If the seller refuses to extend it, the buyer must immediately cancel the contract to protect their deposit, or gamble by letting the deadline pass.
Related Terms
- Contingency — The legal escape hatch that the commitment date regulates
- Earnest Money — The massive cash deposit at risk if the date is missed
- Breach of Contract — The result of failing to close after the commitment date passes
Barnes Walker Closing Protection
Barnes Walker's real estate attorneys fiercely monitor financing contingencies and commitment dates for our buyer clients, aggressively pursuing lender compliance or drafting emergency extensions to ensure our clients never accidentally forfeit their escrow deposits. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC