What Is an Addendum in Real Estate?
An addendum in real estate records additions to an original purchase contract. It often addresses terms that the parties neglected to describe when they wrote the first agreement. Depending on their needs, buyers and sellers may propose addenda before or after signing the original contract.
Once the parties have written and signed the purchase addendum, they attach it to the real estate purchase agreement. Buyers and sellers must document extra terms—otherwise, they won’t be enforceable.
An addendum doesn’t replace the existing contract. It only adds to or clarifies certain aspects of the purchase agreement. If an addendum contradicts a term in the original contract, the addendum will prevail. The addendum serves as the most recent mutual understanding between the parties.
What if I Want to Change Existing Terms?
If you want to edit existing terms of a contract, use a real estate purchase agreement amendment instead.
Types of Addenda in Real Estate
Buyers and sellers can write different addenda to achieve various goals. Some addenda help address issues that arise after the initial agreement is written. Others clarify terms to reduce misunderstandings.
Explore various types of real estate addenda that can help parties document additions without requiring an entirely new contract.
Earnest Money Deposit Addendum
An earnest money deposit is a good-faith deposit a buyer makes to show their intention to buy a piece of property. You can add an earnest money deposit addendum if the original contract is silent on the topic or doesn’t contain all the essential details. For example, you can record the amount and how the buyer will pay it.
Inspection Addendum
An inspection addendum gives the buyer the right to have the property inspected by a professional before they proceed with the sale. It also outlines options if the inspection reveals severe issues. For example, the addendum may allow the buyer to request repairs or withdraw from the sale.
Escrow Holdback Addendum
An escrow holdback addendum explains that a seller must hold back some of the proceeds from a real estate sale to cover repair costs after the closing is completed. Under this addendum, a third party will manage the distribution of the funds.
This addition assures the buyer that the seller will fulfill their obligations. It can also help the seller close on time and address last-minute repair issues, avoiding a canceled deal in a volatile market.
Estoppel Certificate Addendum
An estoppel certificate addendum confirms the details of a current lease between the seller and a tenant. This is important because a buyer takes on the role of landlord when they purchase a rental property, so they’ll need to know the lease terms in place and their legal obligations.
Third-Party Financing Addendum
A third-party financing addendum states that the sale will only proceed if the buyer can secure financing from a third party. It details the type of financing the buyer is seeking, the loan amount, and the consequences if the buyer is unable to obtain this financing.
Seller Financing Addendum
A seller financing addendum lets the buyer obtain financing from the seller instead of a traditional financial institution, like a bank or a mortgage company. It includes the loan amount, loan term, interest rate, repayment schedule, and default terms.
Closing Date Extension Addendum
A real estate addendum to extend the closing date is helpful when both parties need more time to address inspection issues or deal with financing problems. It documents the new closing date and renders the initial closing date null.
Appliances Addendum
This addendum to a real estate contract lets the seller include appliances as part of the sale. It names each item (washer, dryer, etc.) and provides information about the condition and warranties.
Sale of Existing Home Addendum
A sale of an existing home addendum lets the property purchase be contingent on the buyer’s ability to sell their current home. This way, the buyer won’t get stuck with two mortgage payments. It also describes what happens if the buyer can’t sell their current home.
Home Warranty Addendum
A home warranty addendum explains that the seller will provide a home warranty plan to protect the buyer from costly repairs. It outlines the coverage details, cost of the warranty, and explains how the buyer can make claims under the warranty.
Common Disclosures in Real Estate
Disclosures help sellers communicate essential information to buyers. They allow sellers to fulfill their legal obligations and provide buyers with the details they need to make fully informed purchases.
Disclosures may be included in the original real estate purchase contract. In some cases, they may need to be added after the fact to divulge specific information under state or local laws. Legal Templates offers forms for two common real estate disclosures:
Lead-Based Paint Disclosure Form
Disclose the presence of lead-based paint. Required for all residential properties constructed before 1978.
Property Disclosure Statement Form
Reveal the condition of a property, including any known defects that may influence the buyer's decision to buy the property. Required in any state that's not a "buyer beware" state.
The seller may be required to make additional disclosures depending on the laws in their area. Explore some common disclosures that are included as real estate addenda:
- Death on the property
- Environmental hazards
- Structural issues
- Water damage
- Pest infestations
- Presence of asbestos
- Condition of major systems, such as the property’s roof and HVAC units
How to Write an Addendum to a Purchase Agreement
An addendum to a real estate contract allows you to refine your original agreement and include all desired terms. Learn how to write an addendum to a purchase agreement below.
Step 1 – Give Details About the Original Purchase Contract
Refer to the original agreement to ensure clarity on what the real estate contract addendum applies to. Include the original contract’s title and effective date. Also, list the address of the property that the buyer will purchase.
Step 2 – Name the Parties
Provide the buyer’s and seller’s full names. Be sure to include the names of each additional buyer and seller, if applicable.
Step 3 – List the Real Estate Addendum Information
Provide as much information about the real estate purchase agreement addendum as possible. Begin by listing the date the addendum will take effect and the state laws that will apply to it.
Describe the terms you want to add. If possible, reiterate the initial terms and state how the addendum will influence or change them. For example, if you’re updating the closing date, list the old date and clarify what the new closing date will be.
Step 4 – Obtain Signatures
Ensure that both the buyer and seller sign the real estate contract addendum. This document does not require notarization, but a notary acknowledgment can enhance its legitimacy and reduce disputes over the agreed-upon terms.
Sample Addendum to Purchase Agreement
View a free sample of a real estate purchase agreement addendum to better understand how to add to an existing contract. Then, create your own addendum using Legal Templates’s guided form, including details to reflect your desired terms. Download the final version as a PDF or Word document, and attach it to the original real estate purchase contract.
