Most people think that for a sale of real property to be valid and enforceable, there needs to be a formal contract of sale. While this is generally true, the courts in New York have long held that so long as any written instrument includes sufficient material terms, the agreement will be enforceable. What constitutes “sufficient material terms” is an issue for the courts to decide when the parties don’t provide enough specifics in their documents.

What Are Material Terms?

Under New York statutes and caselaw, material terms for an agreement for the sale of property include “the premises, the parties, the purchase price and terms, the closing date, and a date for due diligence.” The courts also consider whether the instrument’s language makes it clear that the parties intended to be bound and that the execution of a contract of sale was nothing more than a formality.

When Are Material Terms Sufficient to Create a Valid Agreement?

The determination of whether a written instrument contains sufficient material terms is fact-based. For example, courts have held that even where an instrument omits a closing date, there can still be a valid and enforceable contract for the sale of property. Further, under New York law, if an agreement contains enough other terms and it appears from the language that the parties intend to be bound, the parties have a reasonable time in which to tender performance, regardless of whether the contract designates a specific date for performance. 

What Documents May Be Enforceable as an Agreement for the Sale of Real Property?

Certain written instruments such as letters of intent, letter agreements, and signed offers may be binding and enforceable agreements for the sale of real property in New York, provided they contain sufficient material terms. 

While these documents may be enough to create a binding agreement, if you are a buyer or seller of real property, it is always best to consult an attorney and draft a proper contract of sale. Doing so ensures that your agreed terms are enforced, and it’s not up to a court to decide your rights. It also avoids the time and expense of litigation. 

If you or someone you know needs representation regarding their rights under a contract, please contact one of our trusted attorneys.