Send a TOE letter when the buyer has missed or is about to miss the scheduled closing date and you need to force action. The letter gives the buyer a reasonable period - typically 30 days - to close, after which you can cancel the contract and keep the deposit. TOE letters are most effective when the buyer is stalling, their financing has issues, or you have a backup buyer ready.
From the seller playbook: Time of the Essence Clauses - Seller Strategy for Closing Deadline Enforcement
This is general information, not legal, tax or accounting advice. Every situation is different. Talk to a licensed attorney, accountant or tax professional before you act.
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