The sales contract, binders, purchase offers, installment contracts, and options

From offer to contract

A purchase offer proposes the terms on which a buyer will buy. Acceptance must match the offer; a material change is a counteroffer. A sales contract ordinarily exchanges the seller's promise to convey title for the buyer's promise to pay. Identify the parties, property, consideration, payment terms, contingencies, closing arrangements, and default provisions. An accepted agreement can remain executory: binding promises exist, but performance is still due.

In New York, General Obligations Law § 5-703 requires a real property sale contract, or a note or memorandum expressing consideration, to be written and signed by the party against whom enforcement is sought, or an agent authorized in writing. The section preserves courts' equitable power to order specific performance in cases of part performance.

A binder is a preliminary record of proposed sale terms, sometimes accompanied by a deposit. Its name and a deposit do not settle whether it binds anyone. Its terms, signatures, completeness, and intent to be bound matter. An express condition that no one is bound until a formal contract is signed matters too. New York purchase contracts use attorney or bar association forms with differing terms; have counsel resolve uncertainty about a particular document.

Three different commitments

A sales contract commits both parties, subject to its terms and contingencies. An installment land contract commonly lets the buyer take possession and pay over time while the seller retains legal title until the agreed performance is completed. An option gives the optionee a right to buy on stated terms within a specified period, without an obligation to buy before exercise. Consideration supports the optionor's promise to keep that opportunity open. Exercise must comply with the option's terms. A right of first refusal instead gives a purchase opportunity when the owner's decision to sell triggers that right.

Conditions and New York protections

A mortgage contingency can condition the buyer's obligation on obtaining specified financing. Follow its notice and performance requirements; a contingency is not a free cancellation right. For covered New York residential sales, Real Property Law § 462 requires delivery of the seller's signed property condition disclosure statement before the buyer signs a binding contract. The statement is not a warranty or a replacement for inspection. Section 461 includes residential installment land contracts and leases with purchase options within its purchase-contract definition.

Unless the contract expressly provides otherwise, New York General Obligations Law § 5-1311 governs casualty and condemnation. Before either title or possession transfers, material destruction without buyer fault, or a material taking, prevents the seller from enforcing and entitles the buyer to recover price payments. An immaterial loss leaves enforcement available to both, with a price abatement. After either title or possession transfers, destruction without seller fault or a taking does not relieve the buyer of payment or entitle the buyer to recover payments. The statute preserves specified claims for earlier breaches.