DEMAND TO CLOSE ESCROW (DCE) 

  1. What is the purpose of the DCE form?

Answer: The Demand to Close Escrow (DCE) is used by either party (buyer or seller) to formally demand that the other party close escrow within 3 days after the scheduled closing date.

It’s the final step before the contract can be canceled due to non-performance. If the other party doesn’t close within the 3-day period, the demanding party may cancel the agreement.

  1. When can I issue a DCE?

Answer: You can issue a DCE only after all contingencies have been removed and the contractual close of escrow date has passed without the other party performing.

Examples:

  • Buyer’s loan is approved and contingencies are removed, but seller hasn’t signed closing documents.
  • Seller is ready to close, but buyer hasn’t deposited final funds.

If contingencies are still open, you must issue a Notice to Perform (NBP or NSP) first — not a DCE.

  1. How much time does the DCE give the other party to close?

Answer: By default, 3 calendar days after delivery of the notice. This is fixed by the RPA (Residential Purchase Agreement) §14G(2).

The 3-day countdown starts once the DCE is delivered, not when it’s signed.

  1. Who can issue a DCE — the buyer or the seller?

Answer: Both parties can use it:

  • Buyer: If seller fails to sign escrow documents, deliver keys, or complete agreed repairs.
  • Seller: If buyer fails to deposit funds, sign loan docs, or complete closing.
  1. What must be true before issuing a DCE?

Answer: ✔ All contingencies have been removed (inspection, appraisal, loan, etc.) ✔ The scheduled close of escrow date has passed. ✔ The demanding party is ready, willing, and able to close.

If these aren’t true, the DCE may be invalid and unenforceable.

  1. What happens if the other party doesn’t close within 3 days?

Answer: If no closing occurs by the end of the 3 days, the demanding party may cancel the contract by delivering a Notice of Cancellation (NC) form. The cancellation is effective once properly delivered.

  1. Does the contract automatically cancel after 3 days?

Answer: ❌ No — the contract does not automatically cancel. The demanding party must actively issue a Notice of Cancellation (NC) after the 3 days expire.

  1. What if the buyer cures and closes during the 3-day period?

Answer: If the buyer (or seller) closes within the notice period, the DCE becomes moot. The transaction proceeds to closing as normal, and no cancellation rights remain for that issue.

  1. Can I issue a DCE before the close date stated in the contract?

Answer: No. The DCE can only be issued after the contractual closing date has passed and the party has failed to close. Issuing it early has no legal effect.

  1. Can a DCE be used to force removal of contingencies?

Answer: No. That’s the purpose of the Notice to Perform (NBP or NSP). The DCE applies only after contingencies are already removed and the closing date has expired.

  1. How is the DCE delivered?

Answer: Delivery methods allowed under RPA §28:

  • In person
  • Email (if electronic delivery was agreed upon)
  • DocuSign or other e-sign platform
  • Overnight mail or fax (less common)

Always keep proof of delivery, as the 3-day period begins at delivery.

  1. What if escrow or the lender is the cause of delay — can we still issue a DCE?

Answer: Yes, but proceed carefully. If a third party (like escrow or lender) causes delay beyond the buyer’s or seller’s control, a DCE may be viewed as unreasonable.

In such cases, brokers often recommend issuing an Extension of Time Addendum (ETA) instead, to keep good faith in the transaction.

  1. Can the DCE be used in an “as-is” or “cash” sale?

Answer: Yes — in fact, it’s very common in cash transactions because closing delays often come from the buyer not wiring funds or the seller not signing off quickly. The DCE simply enforces the closing date regardless of financing type.

  1. Does the DCE change the escrow closing date?

Answer: No. It does not modify the contract date — it just gives a grace period of 3 calendar days to perform before cancellation is allowed.

  1. Can a DCE be withdrawn?

Answer: Yes. The party who issued the DCE can rescind or ignore it anytime before issuing a Notice of Cancellation. The DCE doesn’t obligate them to cancel — it just gives them the right to.

  1. What if both parties blame each other for the delay?

Answer: Then it becomes a factual dispute. Each side should document who was truly “ready, willing, and able” to close. If both issue DCEs, it could lead to mediation or arbitration under RPA §22.

Brokers should verify escrow instructions, loan funding status, and communication logs before advising on cancellation.

  1. Can the DCE be used if title or recording is delayed?

Answer: Only if the delay is caused by the other party’s failure to provide signatures or documents. If title is delayed due to recording office backlog or a neutral cause, a DCE might not be appropriate — use an Extension of Time Addendum (ETA) instead.

  1. What are the risks of issuing a DCE incorrectly?

Answer: If issued prematurely (before closing date or before contingencies removed), the notice is invalid and may expose the agent or seller to liability for wrongful cancellation or bad faith. Always verify the timeline with your broker before delivery.

  1. Who should sign the DCE form?

Answer: The party demanding performance (buyer or seller) must sign. Agents may prepare and send it, but the principal’s signature is required for legal effect.

  1. What happens to the EMD if seller cancels after DCE?

Answer: If the buyer failed to close without lawful excuse, the liquidated damages clause (if initialed in RPA §21) may apply. Escrow will hold the deposit until both sides sign a Cancellation of Contract (CC) form or there’s a legal order.

  1. Can the buyer issue a DCE against the seller?

Answer: Yes. For example, if the buyer is ready and seller refuses to sign closing documents or deliver possession, the buyer can issue a DCE to demand closing.

If seller still doesn’t perform, buyer may cancel and possibly pursue damages.

  1. What’s the difference between DCE and NSP/NBP?
Form Purpose When Used Days to Perform
NBP (Notice to Buyer to Perform) Buyer missed a deadline (e.g., contingencies, EMD) Before closing 2 days
NSP (Notice to Seller to Perform) Seller missed a pre-closing duty (e.g., disclosures) Before closing 2 days
DCE (Demand to Close Escrow) Either party failed to close on time After closing date 3 days
  1. Should the broker review before sending a DCE?

Answer: ✅ Yes, always. Because a DCE can lead directly to cancellation or litigation, the broker should confirm:

  • All contingencies are removed.
  • The close date has passed.
  • The demanding party is truly ready to close.
  1. Does the DCE apply to lease or commercial transactions?

Answer: Yes — but only if the underlying contract specifically references the C.A.R. DCE form or mirrors its terms. Otherwise, use a custom demand letter prepared by the broker or attorney.

  1. Can the DCE be used in a probate or short sale?

Answer: ⚠️ Use with caution.

  • Probate sales: court confirmation might delay closing; a DCE could be invalid.
  • Short sales: lender approval often controls timing; issue an ETA instead.

Always check the addendum terms for those transaction types.

✅ Broker Summary

Key Point Explanation
Purpose Enforce closing after missed escrow date
Timeframe 3 calendar days
When to Use After all contingencies removed and one party fails to close
Effect Failure to close → right to cancel
Form Required Next Notice of Cancellation (NC)
Best Practice Verify readiness, proof of delivery, and broker review

Disclaimer: The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.