New York Real Estate Contracts: What's Tested on the Exam

New York has some unique contract practices — especially the role of attorneys and the co-op purchase process — that appear on the state exam.

Attorney Role in New York Real Estate

In New York, attorneys play a central role in residential real estate transactions — more so than in most other states.

• The real estate contract (Contract of Sale) is typically drafted by attorneys, not real estate agents
• Both buyer and seller are represented by separate attorneys at closing
• The period between accepted offer and signed contract is called the "attorney review period" or contract negotiation phase

What the agent does: Prepares a binder or term sheet after verbal acceptance; the attorney then drafts the formal Contract of Sale.

What agents do NOT do in New York: Draft the Contract of Sale themselves (this would constitute unauthorized practice of law).

Contract of Sale: Key Provisions

Down payment at signing: In New York, the buyer typically pays 10% of the purchase price at contract signing (not at closing like some states). This is held in escrow by the seller's attorney.

Mortgage contingency: Standard contracts include a mortgage contingency — buyer can cancel and recover the 10% deposit if financing is denied.

Closing date: New York closings often use a "time is of the essence" clause — missing the closing date can constitute a default.

Due diligence period: Unlike states with formal inspection contingencies, New York buyers typically conduct inspections before signing the contract.

Co-op vs. Condo Transactions

New York (especially NYC) is home to thousands of co-operative apartments (co-ops), which are structured differently from condos.

Co-op (Cooperative): - Buyer purchases shares in a corporation that owns the building - Buyer receives a proprietary lease for their unit - The co-op board must approve the buyer (board approval process) - Board can reject buyers without disclosing a reason (as long as not discriminatory) - Financing is more complex — a co-op loan is a share loan, not a mortgage

Condo: - Buyer purchases real property (fee simple ownership of the unit) - Common areas owned collectively by unit owners - No board approval required to purchase - Standard mortgage financing

The co-op board approval process is a significant source of exam questions — the board's right to reject buyers is broad, but cannot be based on protected class characteristics.

Common Exam Questions

Q: In a New York real estate transaction, who typically drafts the Contract of Sale? A: An attorney (licensed to practice in New York)

Q: A buyer signs a co-op contract and is rejected by the co-op board without reason. The buyer: A: Generally has no recourse — the board has broad discretion to reject buyers. The buyer's deposit should be returned.

Q: The typical down payment paid at contract signing in New York is: A: 10% of the purchase price (held in escrow by seller's attorney)

[Practice New York contract questions at CARealestate.com/states/new-york](https://carealestate.com/states/new-york)