"Time is of the essence" is a phrase used in real estate to emphasize the importance of acting promptly and efficiently in a transaction. time is a critical factor and delays could potentially have significant consequences or negative impacts. For example, If buyers or sellers agree to a specific closing date in a purchase agreement and the contract includes the clause, it signifies that meeting that closing dates are crucial. Failure to close the transaction within the specified timeframe could result in contractual penalties, such as financial repercussions or even termination of the agreement.