New York Contracts
Practice Questions & Answers (2026)
Contract law questions on the New York real estate exam test both general contract principles and New York-specific transaction requirements. The New York Department of State (DOS) tests how New York contract law applies to purchase agreements, counteroffers, contingencies, and earnest money disputes. Pay close attention to offer and acceptance mechanics, how counteroffers extinguish prior offers, and the specific timelines under New York law for earnest money handling and contingency resolution. These are areas where candidates who studied nationally often apply the right concept but the wrong NY-specific timeframe or rule.
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New York Contracts — Practice Questions & Answers
132 questions on Contracts from the New York real estate question bank. First 10 are free — sign up to unlock all 132.
Q1. In New York real estate practice, the contract of sale is typically prepared by:
Explanation
In New York, it is customary for an attorney — typically the seller's attorney — to prepare the contract of sale. Real estate agents typically do not draft the contract.
Q2. What is the 'attorney review' period in a New York real estate contract?
Explanation
The attorney review period allows either the buyer's or seller's attorney to review the signed contract and, within a specified time, cancel or request modifications to the contract.
Q3. A contingency clause in a purchase contract:
Explanation
A contingency clause makes the contract conditional upon a specific event, such as obtaining financing or satisfactory inspection results. If the contingency is not met, either party may cancel without penalty.
Q4. An exclusive right to sell listing agreement means:
Explanation
In an exclusive right to sell listing, the listing broker earns a commission regardless of who produces the buyer — including the seller themselves. This provides the strongest protection for the broker.
Q5. Which of the following would make a real estate contract voidable?
Explanation
A contract signed by a minor is voidable at the minor's option because minors lack contractual capacity. A contract with an illegal purpose or lack of consideration would be void, not voidable.
Q6. In New York, a buyer's broker agreement typically establishes:
Explanation
A buyer's broker agreement defines the agency relationship between the buyer and the broker, including the broker's duties, the buyer's obligations, and how the broker will be compensated.
Q7. The Statute of Frauds requires that real estate contracts in New York must be:
Explanation
The Statute of Frauds requires that contracts for the sale of real property be in writing and signed by the party against whom enforcement is sought in order to be legally enforceable.
Q8. An option contract in real estate gives the optionee the:
Explanation
An option contract gives the optionee (potential buyer) the right, but not the obligation, to purchase the property at a specified price within a specific period. The optionor (seller) is bound if the option is exercised.
Q9. What is 'liquidated damages' in a real estate contract?
Explanation
Liquidated damages are a pre-agreed sum specified in the contract to compensate the non-breaching party in the event of a breach. In NY residential sales, the earnest money deposit is often specified as liquidated damages if the buyer defaults.
Q10. In New York, a 'time is of the essence' clause in a real estate contract means:
Explanation
A 'time is of the essence' clause makes the closing date a strict contractual deadline. Failure by either party to close on the specified date constitutes a breach, exposing the defaulting party to legal remedies.
Q11. A counteroffer legally:
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