Ten percent,
months in escrow
In New York the accepted offer means little until contracts are signed and 10% is deposited. That deposit sits in escrow through closing — protected by contingencies, forfeited without them.
Before you read on
- General information as of August 2026; contracts vary and yours controls.
- Not legal advice — the deposit's protection is precisely what your attorney negotiates.
- Contingencies are the whole game: Section 3.
Point 1How the New York sequence works
Unlike most US states, an accepted offer in New York binds no one. The seller's attorney sends a contract, your attorney marks it up while diligence runs, and only signatures plus the deposit — customarily 10% of price — create a deal. Until then, sellers can and do keep showing, and buyers can and do walk.
The deposit then sits in the seller's attorney's escrow account until closing, typically one to three months, longer for new development. It is credited against the price at closing; the question the contract answers is what happens to it if closing never comes.
Point 2What the escrow actually protects
Escrow means the seller's attorney holds the funds as fiduciary — the seller cannot spend them, and release requires the contract's conditions or both parties' consent. Disputes freeze the money; neither side can simply take it while the other objects.
Wire the deposit only against verified instructions — deposit wires are the prime target for closing fraud, and a diverted deposit is a catastrophe no contingency fixes. Confirm account details by phone against a known number, every time.
Point 3Contingencies: who keeps the money
The buyer's real exposure is the gap between confidence and contingency: waiving the financing contingency to win a bid means the deposit stands behind your certainty of closing. In hot markets that waiver is common and usually survivable for strong buyers; in rate-volatile markets it is where deposits die. Waive deliberately, never by default.
| Contingency | What it protects |
|---|---|
| Financing contingency | Deposit returns if the loan is denied on stated terms |
| Funding contingency (new dev) | Rare; sponsor forms usually favor the sponsor |
| Board approval (co-ops) | Deposit returns if the board rejects you |
| Clear title | Seller must deliver marketable title or deposit returns |
| No damage / casualty | Material damage before closing lets you exit |
Whatever is absent from the contract is absent from your protection. All-cash contracts typically waive financing protection by definition.
Point 4Forfeiture, and what it costs in practice
A buyer who simply fails to close without contractual protection loses the deposit — courts enforce the 10% as liquidated damages, and New York precedent is unsympathetic. On a $2 million purchase that is $200,000 for changing your mind.
The converse: a seller who cannot deliver — title problems, tenant refuses to leave, building fails the contract's conditions — returns the deposit, and the contract says whether more is owed. Both directions argue for the same practice: sign contracts your circumstances can actually perform.
No — it is custom, and contracts occasionally vary it. But New York sellers expect 10% at signing, and the amount is enforceable as liquidated damages if the buyer defaults.
No. It is held in the seller's attorney's escrow account as fiduciary funds until closing or a contractual release. Disputes freeze it.
Only if the contract has a financing contingency and the denial fits its terms. Waiving the contingency puts the deposit behind your ability to close regardless.
Standard co-op contracts return the deposit on board rejection. What they do not excuse is a package you never submitted or an interview you refused — diligence obligations remain.
Only at contract signing with the deposit. Until then either side can walk, and sellers may continue showing the property — which is why speed through diligence matters.
Verify escrow account details by phone against an independently known number before wiring, and treat any emailed change of instructions as fraud until proven otherwise.
RELATED GUIDES
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Buying from abroad? We will coordinate the contract review and deposit logistics with your attorney so the 10% moves once, safely.
Important notice
The figures on this page are general information as of August 2026 and do not represent an offer, a quote, or a guarantee of any transaction terms. Reinvent NY does not provide legal, tax, or investment advice. Confirm anything material with an attorney and a CPA before you act on it. Nothing here is a solicitation to invest, and no return is promised. Real estate brokerage services are provided through R New York.