What is the Effective Date on Commercial Real Estate Contracts in Texas?

Effective Date Commercial Contract TexasWhen negotiating a commercial real estate contract on an improved property (TAR-1801) in Texas the Effective Date of the contract is the date that the title company Receipts the contract AFTER the contract is executed by ALL parties.  This is addressed in paragraph 24 of the contract.

The effective date for a commercial contract is different than on a residential contract and sometimes causes confusion with realtors.  Commercial transactions are negotiated differently and often have more delays so the task force that works on these contracts decided to allow the parties to not have to comply with performance obligations until after the contract is receipted by the escrow agent.  On page 14 of the contract under Escrow Receipt the date that the escrow agent inserts will become the effective date.

It’s very important that you know what the effective date is because most of the performance requirements (e.g. feasibility expiration date) of the commercial contract are tied to a certain number of days (when does a day officially end?) AFTER the effective date.  Getting this wrong can potentially cost you thousands.

Legal Disclaimer: The information provided above is only for informational purposes and should not be thought of as legal advice for your commercial contract. We always recommend that you call your attorney to review and advise you on your commercial real estate contract as individual situations may differ from situation to situation.  If you don’t have an attorney we would be happy to recommend a few to you.  For additional information about the Effective Date you can also check with the Texas Association of Realtors

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