Key Takeaways
- Purchase contracts in NY are typically prepared by attorneys, not licensees
- The binder or offer to purchase is a preliminary agreement before the formal contract
- Common contingencies include financing, inspection, and attorney review
- Earnest money is held in the broker's escrow account until closing or termination
- Time is of the essence clauses make deadlines strictly enforceable
Last updated: January 2026
Purchase Contracts & Contingencies
New York has a unique, attorney-driven contract process.
The NY Contract Process
Typical Sequence
| Step | Description |
|---|---|
| 1. Offer | Buyer makes offer |
| 2. Binder | Preliminary agreement (if used) |
| 3. Attorney review | Both sides review |
| 4. Contract signing | Formal contract |
| 5. Due diligence | Inspections, etc. |
| 6. Closing | Title transfer |
Binder (Offer to Purchase)
A binder is a preliminary agreement:
| Feature | Detail |
|---|---|
| Not binding | Typically non-binding |
| Shows intent | Serious buyer |
| Key terms | Price, property, parties |
| Attorney review | Full contract follows |
Note: In NY, attorneys typically draft the formal purchase contract.
Contract Elements
Essential Terms
| Element | Description |
|---|---|
| Parties | Buyer and seller names |
| Property | Legal description |
| Purchase price | Amount |
| Financing terms | Loan details |
| Closing date | Target date |
| Contingencies | Conditions |
| Signatures | All parties |
Common Contingencies
Financing Contingency
| Feature | Detail |
|---|---|
| Purpose | Buyer must obtain loan |
| Time frame | Usually 30-45 days |
| If not obtained | Buyer can cancel |
| Deposit returned | If financing fails |
Inspection Contingency
| Feature | Detail |
|---|---|
| Purpose | Professional inspection |
| Time frame | Usually 10-14 days |
| Issues found | Negotiate or cancel |
| Types | Home, pest, radon, etc. |
Attorney Review
| Feature | Detail |
|---|---|
| NY practice | Standard in NY |
| Time frame | Usually 3-5 days |
| Either party | Can disapprove |
| Modifications | Often negotiated |
Appraisal Contingency
| Feature | Detail |
|---|---|
| Purpose | Property must appraise |
| Tied to loan | Lender requirement |
| Low appraisal | Renegotiate or cancel |
Earnest Money
| Aspect | Detail |
|---|---|
| Purpose | Shows good faith |
| Amount | Typically 1-3% in NY |
| Held by | Broker escrow or attorney |
| Disposition | Applied to purchase or returned |
Time is of the Essence
| Feature | Meaning |
|---|---|
| Strict deadlines | Must be met exactly |
| No extensions | Unless agreed |
| Breach | If deadline missed |
| Default | Remedies available |
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Test Your Knowledge
In New York, who typically prepares the formal purchase contract?
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Test Your Knowledge
What does "time is of the essence" mean in a real estate contract?
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D