Navigating Real Estate Contracts in New York State: Key Terms and Legal Considerations

Real estate contracts can seem complicated, especially in a place like New York. When you are buying or selling a home, it’s important to understand what these contracts mean and how they protect your interests. Whether you’re new to real estate or have some experience, knowing the basics of a real estate contract can help you feel more confident in the process. This guide will walk you through the essential parts of a real estate contract in New York, so you’ll know what to expect and what to watch out for. At, Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. , we are here to guide you through the legal process and help you navigate the complexities of your case.

What is a Real Estate Contract?

A real estate contract is a legal agreement between the buyer and the seller of a property. This contract outlines the terms and conditions of the sale, making sure both parties know what they are agreeing to. The contract covers important details like the price of the property, the closing date, and any specific responsibilities the buyer or seller must handle before the sale is completed. In New York State, these contracts are essential because they ensure that the property transaction follows the law and protects both the buyer and the seller from misunderstandings or disputes.

Key Elements of a Real Estate Contract

When entering into a real estate contract in New York, there are several important elements to be aware of. The contract must clearly state the names of the buyer and seller, as well as a description of the property being sold. This description usually includes the address, as well as details like the size of the lot and any special features that come with the property. The price of the property and how the buyer plans to pay for it, whether through a mortgage or other financing, must also be included in the contract.

Another key element of the contract is the closing date. This is the date when the ownership of the property will officially transfer from the seller to the buyer. Both parties must agree to this date, and it is often set a few weeks or months after the contract is signed. Any conditions that must be met before the closing, such as repairs or inspections, should also be clearly stated in the contract.

Contingencies in a Real Estate Contract

Contingencies are conditions that must be met for the sale to go through. These are common in real estate contracts and are designed to protect both the buyer and the seller. In New York, one of the most common contingencies is a mortgage contingency. This means that the buyer’s offer to purchase the home is dependent on them securing a loan to pay for it. If the buyer cannot get approved for a mortgage, they can back out of the contract without losing their deposit.

Another common contingency is the home inspection contingency. This allows the buyer to have the property inspected by a professional before the sale is finalized. If the inspection reveals serious problems with the property, the buyer may ask the seller to make repairs, lower the price, or, in some cases, the buyer may choose to cancel the contract altogether.

The Importance of an Attorney in Real Estate Transactions

In New York State, it is common for both buyers and sellers to have an attorney review the real estate contract. While it is not required by law, having an attorney can help ensure that the contract is fair and that your rights are protected. Attorneys can also help negotiate any changes to the contract and assist with the closing process. In New York, real estate transactions can involve a lot of legal paperwork, and an attorney can make sure that everything is done correctly to avoid potential problems in the future.

Earnest Money and Deposits

When you enter into a real estate contract, the buyer will usually be asked to provide an earnest money deposit. This is a good faith payment that shows the buyer is serious about purchasing the property. In New York, the amount of the earnest money deposit can vary, but it is often between one and three percent of the purchase price. This deposit is held in escrow, which means it is kept by a neutral third party until the sale is completed. If the sale falls through due to a valid contingency, the buyer will usually get their deposit back. However, if the buyer backs out of the contract for no valid reason, the seller may be able to keep the deposit.

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Closing Costs in a Real Estate Contract

In addition to the purchase price of the property, both the buyer and the seller may be responsible for closing costs. These are the fees and expenses associated with finalizing the real estate transaction. In New York, closing costs for buyers can include things like loan origination fees, appraisal fees, and title insurance. Sellers may have to pay for things like the real estate agent’s commission and transfer taxes. The real estate contract should outline who is responsible for paying which closing costs, so there are no surprises at the closing table.

Title and Ownership in a Real Estate Contract

One of the most important parts of a real estate contract in New York is the transfer of the title. The title is the legal document that proves who owns the property. Before the sale is completed, a title search will be conducted to make sure there are no issues, like unpaid taxes or liens, that could affect the buyer’s ability to take ownership of the property. If any problems are found during the title search, they must be resolved before the sale can proceed. The real estate contract should include a provision that the seller will provide the buyer with a clear title at the time of closing.

Negotiating a Real Estate Contract

Negotiation is a common part of the real estate process in New York. Both the buyer and the seller may want to make changes to the terms of the contract before signing. For example, the buyer may ask the seller to lower the price if they feel the home needs significant repairs, or the seller may ask the buyer to waive certain contingencies in exchange for accepting their offer. In some cases, the contract may go back and forth between the buyer and seller multiple times before both parties are happy with the terms. Having an attorney involved in this process can be very helpful to ensure that you are getting a fair deal and that the contract accurately reflects your wishes.

What Happens if the Contract is Broken?

Unfortunately, sometimes things don’t go as planned, and one party may not be able to fulfill their part of the contract. If this happens, the contract may be considered breached. For example, if the buyer does not secure financing by the closing date or the seller refuses to make agreed-upon repairs, the other party may have legal grounds to cancel the contract or seek compensation. In New York, real estate contracts often include clauses that outline what will happen if the contract is breached. This can include financial penalties or the ability to back out of the deal without further consequences. It is important to carefully review these clauses with your attorney before signing the contract to understand what your rights are in the event of a breach.

Finalizing the Sale

Once all the terms of the contract have been met, it’s time to close the deal. The closing is when the final paperwork is signed, and the property officially changes hands. In New York, the closing usually takes place at a title company or an attorney’s office. The buyer will sign the mortgage documents, and the seller will sign over the deed to the property. The buyer will also pay any remaining closing costs, and the seller will receive the proceeds from the sale. Once the closing is complete, the buyer will receive the keys to their new home, and the sale will be finalized.

Navigating a real estate contract in New York State can be challenging, but having the right legal guidance can make all the difference. Whether you are buying or selling a property, it’s important to have a clear understanding of your contract and your rights throughout the process. If you need assistance with a real estate transaction, the experienced attorneys at Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. are here to help. With our knowledge and dedication, we can guide you through every step of the process to ensure a smooth and successful transaction. Contact us today to learn more about how we can assist you with your real estate needs.