Part 6*: What is a Mortgage Commitment Contingency in a Residential Contract of Sale in New York?

Perhaps one of the most important and yet least understood paragraphs in the standard form of Residential Contract of Sale in New York is the Mortgage Commitment Contingency. In simple terms, the mortgage commitment contingency allows the Purchaser to cancel the contract and have their downpayment refunded if they cannot obtain a mortgage commitment within a specified time period. The Purchaser typically has 30 days to obtain its mortgage commitment and the purchaser must make diligent efforts.

A mortgage commitment subject to an appraisal is not deemed a mortgage commitment for purposes of the Mortgage Commitment Contingency. This does not mean that the purchase has an appraisal contingency for the purchase price. It simply means that the bank’s appraisal must be satisfactory to the bank to loan money.

In practice, if a purchaser has diligently pursued its mortgage commitment from an institutional lender and the lender needs more time to process the request the parties can agree to extend the Commitment Date in the contract for a specified period. If not, the purchaser may elect to cancel the contract in which case the seller would refund the downpayment, and the contract would be rendered null and void.

*Thank you for taking the time to read this article. This article is part of our “From Contract to Closing; Demystifying NY Residential Real Estate” Series. Other aspects of residential real estate transactions in New York are discussed in other Parts of this series.

For questions about residential real estate law, or general information about our firm, please contact us at (914) 338-8050 or send an e-mail to We look forward to hearing from you.

Betensky Law PLLC
118 N. Bedford Road, Suite 302
Mount Kisco, New York 10549
(914) 338-8050

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