Contract preparation: data, the mortgage contingency, the down payment, and signing practice

Prepare the facts before the contract

A New York purchase contract should accurately identify the parties, property, price, contract deposit, financing terms, closing arrangements, included personal property, exclusions, and negotiated conditions. Verify names and signing authority; distinguish the street address from the property description. Record whether possession occurs at closing or at another agreed time. A licensee who is not an attorney may not give legal advice or draft riders; refer legal wording and its consequences to an attorney.

Financing and the down payment

A mortgage contingency makes the buyer's obligation conditional on obtaining financing on specified terms, subject to the clause's requirements. Identify the loan amount, type and relevant terms, commitment deadline, buyer's application obligations, and notice and cancellation procedure. Prequalification is not a mortgage commitment. A denial does not by itself establish a right to cancel: the buyer must satisfy the negotiated clause. Track deadlines and seek an agreed extension before time runs out.

The contract deposit is money paid under the contract and held by the named escrow holder pending authorized disposition. It ordinarily counts toward the price at closing; it is not an extra charge. The total down payment is the price portion not financed by the purchase mortgage, and can exceed the initial deposit. For a $500,000 price and $400,000 loan, the total down payment is $100,000. If $25,000 was deposited, $75,000 remains toward the price, before closing costs and adjustments.

Signing and disclosures

Check that the final contract and attachments reflect the negotiated terms before signatures. Confirm all required signers and authority, complete blanks, obtain the necessary signatures and delivery, and distribute complete copies. New York has no single promulgated statewide purchase contract; forms and local signing practices vary. Do not confuse an offer, agency acknowledgment, lender letter, and executed purchase contract. Under New York Real Property Law § 443, the agency disclosure identifies representation and is not itself a contract. Its timing requirements apply before the relevant representation agreement or at first substantive contact, as applicable.

Federal lead-based paint disclosure requirements concern covered housing built before 1978; confirm applicable disclosures before the buyer becomes obligated.

Possession affects risk

Under New York General Obligations Law § 5-1311, unless the contract expressly provides otherwise, material destruction without buyer fault before either title or possession transfers prevents the seller from enforcing the contract and entitles the buyer to recover price payments. Immaterial destruction permits enforcement with a price abatement. Once either title or possession transfers, destruction without seller fault does not relieve the buyer of the price obligation. Early possession therefore deserves careful attention.