NYC Condo Contract of Sale: Buyer’s Guide & Breakdown

So, you’ve come to terms with the buy vs. rent debate, braced yourself for high interest rates and potential refinancing when rates drop, and confronted the lack of desirable inventory. After months of scouring listings and visiting open houses, you’ve finally found your dream home. With your buyer’s agent analyzing the valuation and negotiating fiercely, you beat other buyers to reach an accepted offer! The next day, the listing agent sends a deal sheet to your attorney, broker, and the seller’s parties.

The property remains available for showings once the due diligence clock starts, typically taking 5-7 business days. This is common because the deal isn’t confirmed until you sign the contract and submit the 10% deposit. It’s not fully confirmed until the seller signs, too. Throughout this time, you’re hoping no higher offer surpasses yours, though you typically have the option to match it. Fortunately, the seller does sign. Before your due diligence period begins and your attorney examines the contract, it’s beneficial to grasp the elements of a contract of sale and any potential rider that may apply.

Or perhaps you’re just on top of your game and want to know everything to expect before you begin your search. We help break it down so you are in the know before a contact.

Important Disclosure: This article is intended to outline the contract to help readers understand its contents. ELIKA Real Estate does not hold any liability for the reader’s understanding or lack thereof. It is strongly recommended that readers seek legal advice for a final contract review.

Key Highlights of the Condominium Contract of Sale

The “Contract of Sale – Condominium” lays out the terms and conditions for purchasing a condominium unit from a seller in detail. This document clarifies obligations and protections for both parties throughout the transaction process. Below, we explore this contract’s essential sections and paragraphs to help explain their importance.

Paragraph 1: Agreement Details

This section specifies the date of the agreement and identifies the seller and purchaser by name and address. It sets the stage for the transaction, clearly defining who is involved.

Paragraph 2: Unit Description and Personal Property

This paragraph describes the unit for sale, including its number and location within the building. It references the condominium’s declaration and by-laws, which govern how the unit can be owned and used. The paragraph also lists the personal property included in the sale, such as appliances and fixtures, ensuring no liens or encumbrances. It specifies any items that are not included in the sale.

Paragraph 3: Purchase Price

This section specifies the complete purchase price for the condominium, covering the downpayment and the terms for paying the remaining balance. It explains the method for settling the purchase price balance, usually through a wire transfer or certified check during the closing.

Paragraph 4: Closing of Title

This paragraph sets the tentative date and location for the closing, indicating where and when the final payment and transfer of title will occur. Flexibility is provided for remote closings if mutually agreed upon by both parties.

Paragraph 5: Representations, Warranties, and Covenants

This section includes assurances made by the seller, such as ownership of the unit, the working condition of appliances, and the absence of outstanding assessments or common charge increases unknown to the buyer. It also specifies the real estate taxes for the unit and the period they cover.

Paragraph 6: Closing Documents

Lists all documents the seller must provide at closing, such as the deed, tax returns, and affidavits. It also specifies the buyer’s required documents and payments, ensuring both parties are prepared for the final transaction.

Paragraph 7: Closing Adjustments

Details how various charges, such as real estate taxes and common charges, will be prorated as of the closing date, ensuring an equitable division of costs between the buyer and seller.

Paragraph 8: Right of First Refusal

This clause addresses any rights the condominium board may have to purchase the unit before the buyer, a common provision in New York City condominiums. It outlines the process and potential outcomes if the board exercises this right.

Paragraph 9: Processing Fee

Specifies that the seller is responsible for all fees payable to the condominium in connection with the sale, such as processing and legal fees, preventing unexpected costs for the buyer.

Paragraph 10: No Other Representations

This clarifies that the buyer has inspected the unit and its common elements and is satisfied with their condition. The buyer agrees to purchase the unit “as is” unless otherwise specified in the contract.

Paragraph 11: Possession

Requires the seller to vacate the unit and deliver it in a broom-clean condition, free of tenancies, ensuring the buyer receives the unit ready for immediate occupancy.

Paragraph 12: Access

This grants the buyer the right to inspect the unit before closing, allowing for final measurements and a last-minute check on its condition.

Paragraph 13: Defaults and Remedies

This clause limits the seller’s remedy to retaining the downpayment as liquidated damages if the buyer defaults. If the seller defaults, it allows the buyer to seek all available legal and equitable remedies, including specific performance.

Paragraph 14: Notices

Establishes the procedures for sending and receiving notices related to the contract, ensuring clear communication between the parties.

Paragraph 15: Purchaser’s Lien

Creates a lien on the unit for the downpayment and any other sums paid, protecting the buyer’s investment until the transaction is complete.

Paragraph 16: Downpayment in Escrow

This document details the handling of the downpayment, which is held in escrow by the seller’s attorney until closing. It also outlines procedures if the closing does not occur and how disputes over the downpayment are resolved.

Legal Clarity and Continuity (Paragraphs 17 to 21)

Paragraph 17: Gender, Singular, and Plural Interpretations

Clarifies how the terms used in the contract should be interpreted, ensuring inclusivity and adaptability to various scenarios involving individuals and entities of different genders and quantities.

Paragraph 18: Entire Contract

Asserts that all prior understandings and agreements between the seller and purchaser are merged into this contract, making it the definitive and comprehensive agreement between the parties regarding the subject matter.

Paragraph 19: Captions

Explains that the captions or headings in the contract are for convenience and reference only and do not define, limit, or describe the scope of the contract or any of its provisions.

Paragraph 20: No Assignment by Purchaser

Prohibits the purchaser from assigning the contract or any of their rights under it to another party without the seller’s consent, ensuring stability and certainty in the transaction.

Paragraph 21: Successors and Assigns

Stipulates that the provisions of the contract shall bind and inure to the benefit of both the purchaser and seller, as well as their respective distributees, executors, administrators, heirs, legal representatives, successors, and permitted assigns, ensuring continuity and the enforceability of the contract beyond the original parties.

Mortgage Commitment Contingency and Additional Provisions (Paragraphs 22 to 30)

Paragraph 22: Mortgage Commitment Contingency

The buyer’s obligation to purchase is conditional upon obtaining a mortgage commitment from an institutional lender within a specified timeframe. If the buyer cannot secure this commitment, they can cancel the contract and receive a refund of their down payment, provided they have met all other contract conditions.

Paragraph 23: Gender and Grammar

The terms used in the contract are intended to be gender-neutral, and singular terms can include the plural and vice versa, as the context requires. This ensures the contract’s language is inclusive and adaptable to various interpretations without changing the intended meaning.

Paragraph 24: Entire Contract

This clause declares that all prior understandings and agreements between the parties are merged into this contract, making it the comprehensive and exclusive statement of the parties’ intentions. This clause prevents any party from claiming the existence of any prior agreements not included in the written contract.

Paragraph 25: Captions

Captions are included for convenience and reference only and do not affect the interpretation of the contract. While headings and titles can help locate information quickly, they do not hold legal weight in interpreting the contract’s provisions.

Paragraph 26: No Assignment by Purchaser

Explicitly prohibits the purchaser from assigning the contract or any of their rights to another party. This ensures that the seller knows precisely who they are dealing with and can rely on the buyer’s commitment to the agreed-upon terms.

Paragraph 27: Successors and Assigns

Ensures that the contract’s provisions are binding upon and inure to the benefit of the parties and their respective heirs, legal representatives, and permitted assigns. This clause extends the obligations and benefits of the contract beyond the original parties to their successors.

Paragraph 28: No Oral Changes

Any changes or additions to the contract must be made in writing and signed by both parties. This provision prevents any party from claiming the contract was altered based on oral agreements, providing legal certainty and clarity.

Paragraph 29: Contract Not Binding Until Signed

Specifies that the contract is not legally binding until it is properly executed and delivered by both parties. This ensures that all parties are fully aware and explicitly agree to the terms before being bound.

Paragraph 30: Lead-Based Paint Disclosure

If applicable, this clause requires the seller to provide a complete and fully executed disclosure of information regarding lead-based paint and/or lead-based paint hazards. This disclosure is crucial in older buildings where lead-based paint might have been used, ensuring the buyer is informed of potential health risks.

The Role of a Contract Rider

• Mortgage Contingency: The buyer’s purchase obligation depends on securing mortgage financing. If financing falls through, the buyer can cancel the contract without penalty.
• Appraisal Gap: Ensures the property is appraised at or above the purchase price. If the appraisal is lower than the purchase price, the buyer can renegotiate the price or cancel the contract without penalty.
• Repairs: Specifies repairs the seller must complete before closing, including timelines and quality standards.
• Post-Closing Tenancy: This defines the conditions under which the seller can stay in the property after closing, covering rent and duration.
• Fixtures and Personal Property: Lists items included in the sale and those excluded, ensuring clarity for both parties.
• Home Inspection: Grants the buyer the right to inspect the property and outlines actions if issues arise, such as repairs or credits.
• Escrow Holdbacks: Sets aside funds in escrow to cover post-closing issues, ensuring resources for necessary repairs or compliance.
• Condo Board Approval: This acknowledges the requirement for approval from the condominium board and details the approval process and timeline.

Due Diligence: Beyond the Contract Review

Due diligence in a real estate transaction extends beyond the contract review and is crucial for a successful purchase. Here are key aspects buyers should consider:

• Title Search: Ensure the property has a clear title with no outstanding liens or legal issues.
• Condominium Board Review: Examine the minutes of the condo board meetings, financial statements, and any upcoming assessments or projects.
• Inspection: Conduct a thorough inspection to identify potential structural issues or needed repairs.
• Neighborhood Research: Evaluate the neighborhood for amenities, future developments, and overall desirability.

Understanding Closing Costs

Closing costs in New York City can be substantial and important to budget. Here are typical costs to expect:

• Attorney Fees: Legal representation fees for contract review and closing are approximately $2,000 – $3,000.
• Title Insurance: Protects against potential title disputes. Approximate range: $1,500 – $4,000.
• Recording Fees: These are fees for registering the sale with the city. The approximate range is $250 – $750.
• Mortgage Recording Tax: A tax on the mortgage amount. The approximate range is 1.8% to 2.05% of the loan amount.
• Mansion Tax: Applied to properties over a certain value. Approximate range: 1% for properties over $1 million.
• Common Charges Adjustment: Prorated common charges for the month of the closing. Varies based on the specific property.

Prospective buyers can use our closing cost calculator in advance to better understand the approximate closing costs before the bank and attorney deliver the final closing cost statement.

Final Thoughts

Understanding these key clauses in a condominium sales contract is essential for buyers and sellers. These provisions outline crucial legal, financial, and procedural responsibilities that ensure a clear and enforceable agreement. By comprehensively reviewing and understanding these clauses, parties can avoid potential disputes and ensure a smooth and successful property transaction. Consulting with a real estate attorney is highly recommended to navigate this complex process effectively.

Important Disclosure: This article outlines the contract to help readers understand its contents. ELIKA Real Estate holds no liability for the reader’s understanding or lack thereof. We strongly recommend that readers seek legal advice for a final contract review.