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Purchase Agreement Addendum & Disclosures

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Purchase agreement addendums, also referred to as “amendments,” are forms that are added to a sales contract at the time of authorization or after it has been signed in order to change or add to the terms of the arrangement between the parties. Both parties are required to sign an addendum. Afterward, it should be attached to the purchase agreement, and any new terms or conditions that were added will become part of the original agreement.

Purchase Agreements – Use to create a sales contract between a buyer and a seller for real estate.

Addendum Types

Closing Date Extension Addendum – If, for any reason, the closing date must be extended.

Condominium Association Addendum – If the property is a condominium association, a copy of the association’s bylaws, rules, and any other agreements must be provided to the buyer for their review.

Earnest Money Receipt – An acknowledgment by the seller, or the seller’s agent, that consideration has been accepted.

Earnest Money Release – If the buyer has decided to void the purchase agreement, within their rights, and elects to retrieve their earnest money deposit being held by the seller or seller’s agent.

Escrow Holdback Agreement Addendum – If the seller makes a promise to perform after the closing, funds will be held in escrow until the performance is complete.

Estoppel Certificate Addendum – Use if the lender wants the seller to verify the lease(s) on the property. The tenant(s) on will be required to sign the estoppel with their lease attached.

Inspection Contingency Addendum – Allows the buyer to enter into a purchase agreement that is contingent on a part of or the entire property passing a clean inspection by a licensed third (3rd) party.

Seller Financing Addendum – Details the financing terms if the seller is to provide a loan to the buyer.

Short Sale Addendum – Describes the terms a bank is willing to sell the property to a prospective buyer. Details time limits and approval that is necessary in order to enter into a binding arrangement.

Termination Letter to Purchase Agreement – For the buyer and seller to officially cancel their agreement and release liability to one another.

Third (3rd) Party Financing Addendum – If financing is required by the buyer in order to complete the purchase of the property (conventional loan, FHA loan, VA loan, etc.).

Disclosures

Lead-Based Paint Addendum – Required to be attached to any agreement where the property was constructed prior to 1978.

Property Disclosure Statement – Required in most States to be issued to the buyer at the time an offer is made or thereafter. Gives a detailed profile of the condition of the property with any material defects known by the seller.

What is a Purchase Addendum?

Definition/meaning: A purchase addendum is any type of written language that supports or modifies an existing agreement or contract. There is no official document that acts as an addendum, any written document can be seen as an addendum if it’s attached to the original document titled as an addendum. Addendums can be broad or specific in nature, depending on its purpose.

Purchase Addendums are most commonly used with the following:

  • Contracts
  • Leases
  • Purchase Agreements
  • Pets
  • Finance
  • Laws

How to Create a Purchase Addendum

An addendum is added either as a disclosure to inform the buyer of an actual or potential issue on the premises. For example, the lead-based paint addendum is required if the home was built before 1978 to caution the new owner for any falling or chipping paint.

Step 1 – Get the Original Purchase Agreement

The buyer and seller should get a copy of the original purchase agreement. They will need to review and find its effective date in order to reference the agreement in the addendum.

Step 2 – Write the Addendum

Complete a blank addendum (Adobe PDF, Microsoft Word (.docx), or Open Document Text (.odt)) or use one (1) of the Specific Types.

Be sure to include the following:

  • Purchase Agreement Effective Date (for reference);
  • Buyer’s Name;
  • Seller’s Name;
  • Property Address; and
  • Changes to the Agreement.

Step 3 – Parties Agree and Sign

For the addendum to be made part of the original purchase agreement, it will need to be signed by both buyer and seller. If the buyer or seller do not agree to the changes, the agreement will become null and void. If there was earnest money that was deposited by the buyer, the money shall be disbursed in accordance with the terms of the original agreement.

Step 4 – Add to the Purchase Agreement

Upon properly being executed and acceptance is made, the addendum will be attached and should be followed as if it was written in the original agreement. The parties will continue the process until an eventual closing where the property will transfer ownership.

Addendum to Contract

An addendum to a contract is used to update or change an existing contract which often happens amongst business relationships. Voiding and creating a new contract is not ideal considering the cost and time it would take to make that change. Instead, it’s far easier to keep the existing contract and use an addendum to make subtle or even large changes as you see fit. Keep in mind that the addendum should match the original agreement in style, font and language. An addendum to a contract should also be signed by the same signatories as the original contract plus additional signatories if need be.

Lease Addendum

It’s very rare that a lease does not include a lease addendum. Leases and addendums most of the time go hand in hand with each other. Due to various laws, such as 42 U.S. Code § 4852d which requires that the Lead Based Paint Disclosure be signed for any properties rented or sold built before 1978. Many landlords and owners prefer to use a basic lease agreement and use addendums to customize their lease on a per tenant basis.


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