Definition
The effective date is when the contract becomes legally binding—usually when both parties have signed. All timelines for contingencies and deadlines start from this date.
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The effective date marks the official start of the contract period and triggers all timelines for contingencies, inspections, and closing. It is critical for establishing deadlines for contingency removals, earnest money deposits, and other contractual obligations. The effective date can sometimes be negotiated separately from the signing date if there are timing considerations.
Pro Tip
Mark the effective date on your calendar. Count contingency deadlines from this date.
Example
The offer was signed on March 1st, but the effective date was set as March 3rd to allow the seller time to notify the current tenant.