What Is Included in a NYC Commercial Real Estate Purchase Agreement?

What a PSA is and how it differs from the LOI

A Letter of Intent (LOI) is a non-binding term sheet that sets economic and process expectations for a transaction — purchase price, deposit, diligence period, exclusivity, closing date, and major economic terms. Most LOIs include a small subset of provisions that are binding (confidentiality, exclusivity, broker confirmation) while leaving the substantive deal terms non-binding pending PSA execution.

The Purchase and Sale Agreement is the binding contract. Once executed, both parties are legally obligated to perform — buyer to close at the agreed price subject to specified contingencies, seller to deliver the property in the agreed condition. The PSA replaces the LOI entirely; everything the parties want to enforce must be in the PSA.

Purchase price, deposit, and escrow mechanics

The first substantive section of the PSA covers the purchase price, deposit structure, escrow holder, and deposit release mechanics. Standard NYC commercial PSAs include:

• Purchase price — typically stated as a gross dollar number, with adjustments at closing for prorations.
• Deposit — typically 5–10% of purchase price; sometimes structured in two tranches (initial deposit and additional deposit at end of diligence).
• Escrow holder — typically a NYC title company or the seller's attorney trust account.
• Deposit release mechanics — when the deposit becomes refundable versus non-refundable, and what events trigger forfeiture.
• Interest on the deposit — typically accrues to the buyer in interest-bearing escrow.
• Allocation of purchase price among asset components (real property, personal property, intangibles) for tax and depreciation purposes.

Diligence period and contingencies

The diligence period is the window during which the buyer can investigate the property and terminate the contract if findings are unacceptable. Standard NYC commercial PSAs negotiate:

• Diligence period length — typically 30–75 days, longer for complex deals (multi-property portfolios, conversion candidates, ground-leased structures).
• What the buyer can terminate for — typically findings on title, environmental, structural, leases, zoning, regulatory compliance, tax abatement, DHCR.
• Notice of termination mechanics — typically requires written notice within the diligence period; missing the deadline converts the deposit to non-refundable.
• Extension rights — pre-negotiated extension periods (often 15–30 days) on payment of an extension fee.
• Access and inspection rights — when the buyer can access the property, with what advance notice, and tenant-coordination requirements.
• Cooperation by seller — providing rent rolls, leases, financials, capex history, tenant correspondence, prior environmental reports.

Representations and warranties — the most negotiated section

The negotiation around reps centers on: (1) scope — how broadly stated; (2) qualifiers — 'to seller's knowledge,' 'in all material respects,' 'except as disclosed'; (3) survival — how long the reps survive after closing (typically 6–18 months); (4) cap — maximum seller liability for rep breaches (typically 1–5% of purchase price); and (5) deductible / basket — minimum claim threshold before seller liability attaches.

Buyers want broad reps with long survival, low caps on qualifiers, high caps on damages, and low deductibles. Sellers want narrow reps, short survival, heavy qualifiers, low caps on damages, and high deductibles. The negotiation typically settles in commercially reasonable middle ground appropriate to the deal size and asset class.

• Title — seller owns the property, free and clear of undisclosed encumbrances.
• Authority — seller has authority to transact; partner / member / lender consents are obtained.
• No litigation — no pending or threatened litigation materially affecting the property.
• Rent roll accuracy — rent roll attached as exhibit is true and complete as of a stated date.
• Lease completeness — all leases delivered are true copies; no other oral or written agreements.
• No defaults — tenants are not in material default; seller is not in default to tenants.
• Compliance with laws — to seller's knowledge, no material violations.
• Environmental — to seller's knowledge, no material environmental conditions.
• DHCR — to seller's knowledge, all rent-stabilization registrations are current.
• Tax abatements — current status, expiry dates, claw-back exposure as described.
• No undisclosed contracts — service contracts, management agreements, brokerage agreements all disclosed.

Conditions to closing

Seller conditions are typically narrower: buyer payment of purchase price, buyer delivery of required closing documents.

• Title insurance available on terms agreed.
• No material adverse change in the property.
• Tenant estoppels delivered from material tenants confirming lease terms.
• SNDA (subordination, non-disturbance, and attornment) agreements where required.
• Seller reps remain true at closing.
• No new violations or ECB issues.
• Lender consent obtained (if applicable).
• Required regulatory consents obtained.
• Tax abatement status confirmed.

Closing logistics — transfer taxes, prorations, and the closing date

The PSA specifies closing logistics in detail. NYC-specific closing items include:

• NYC Real Property Transfer Tax (RPTT) — typically paid by seller; 1.425% on commercial sales over $500K.
• NYS Real Estate Transfer Tax (RETT) — typically paid by seller; 0.4% plus additional 0.25% on commercial sales over $3M.
• Mortgage recording tax — typically paid by buyer; 1.925%+ combined NYC + NYS. CEMA structuring can save the full mortgage tax on assumed seller debt.
• Title insurance premium — typically paid by buyer.
• Survey or ALTA / NSPS update — typically paid by buyer.
• Prorations — real estate taxes, water/sewer, oil, prepaid rent, security deposits.
• Adjustments for unpaid bills, capex liabilities, tenant work obligations.
• Apportionment of brokerage commissions (typically seller pays out of proceeds).
• Closing date and place — typically NYC title company offices, with remote signings increasingly standard.

Default and remedies

The PSA specifies what happens if either party fails to close. Standard NYC commercial provisions:

• Buyer default — typically forfeit of deposit as liquidated damages (the seller's sole and exclusive remedy in most NYC commercial PSAs).
• Seller default — typically buyer's choice of (1) specific performance, (2) refund of deposit plus reimbursement of diligence costs (capped, often 1–3% of purchase price), or (3) termination with refund of deposit.
• Notice and cure periods — typically 5–10 business days to cure curable defaults.
• Force majeure — typically excuses delays but not nonperformance, with extended provisions for events affecting the property or capital markets.

NYC-specific PSA provisions worth highlighting

• DHCR rent-stabilization reps and post-closing indemnity — especially important on mixed rent rolls.
• Local Law 11 facade disclosure — seller represents on FISP filings and any unsafe classifications.
• Local Law 97 emissions disclosure — seller represents on current compliance status and any pending fines.
• J-51 / 421-a / 467-m / ICAP abatement assignment mechanics — what conditions the abatement assigns through closing.
• Tenant estoppel coverage — which tenants are required estoppels, what the estoppels must confirm.
• SNDA mechanics for lender-financed leases.
• BSA variance and special permit reps if the property has non-conforming use.
• Certificate of Occupancy reps and any pending changes.
• ACRIS / CEMA mechanics on assumed debt structures.
• Right of first refusal / right of first offer notices to other partners or tenants.

Engage NYC commercial counsel before the LOI is signed

The most consequential PSA negotiations actually happen at the LOI stage — purchase price, deposit, diligence period, exclusivity, broker confirmation, and major economic terms. By the time the PSA draft circulates, the structural framework is already set. Buyers who engage NYC commercial real estate counsel only at PSA stage routinely accept LOI terms that constrain favorable PSA negotiation.

Skyline Properties — Robert Khodadadian's brokerage with $976M+ in closed NYC transactions — works closely with NYC commercial real estate attorneys on every closing and routinely refers buyers to counsel with deep NYC PSA experience. Engaging the right attorney early is one of the highest-leverage decisions a NYC commercial buyer makes.

How Skyline-brokered PSAs have been structured on recent closings

Recent Skyline-brokered transactions provide useful anchors for how NYC commercial PSAs are actually structured. The 6 East 43rd Street ($135M Vanbarton 441-unit conversion) PSA included specific 467-m abatement assignment mechanics, conversion-related zoning reps, tenant vacancy covenants, and lender-coordination provisions for the $300M Brookfield construction financing. The 101 Greenwich Street ($105M Metro Loft conversion) PSA similarly carried conversion-specific provisions and abatement-coordination terms.

The 530 West 25th Street Chelsea development site ($72M) PSA was structured around zoning verification, demolition obligations, and environmental indemnities typical of NYC development sites in West Chelsea Special District. The 236 Fifth Avenue 99-year ground lease ($65M) was documented as a ground-lease assignment with specific reset-mechanism reps, ground-lessor consent, and SNDA coverage. The 131-133 Prince Street SoHo retail trade ($50M record) carried detailed retail-tenant estoppel mechanics, percentage-rent provisions, and exit-pricing structures appropriate to a trophy retail asset.

Each PSA is unique, but the structural patterns are consistent within asset class. A senior NYC commercial broker working with experienced NYC commercial real estate counsel produces PSAs that reflect the asset class's typical provisions while protecting the client's specific economic interests.