A real estate purchase agreement addendum adds to a purchase agreement, expanding on the contract terms before the parties execute the agreement.
It is a legally binding change to the purchase contract, so you must handle it correctly for it to be enforceable.
What Is a Purchase Agreement Addendum?
An addendum to a real estate purchase is a legal form that documents changes to the original purchase contract.
Addendums attach to the real estate purchase agreement to note supplementary changes, additions, or deletions before the parties sign the purchase contract.
Sellers, buyers, and real estate agents must properly document all modifications to a purchase agreement for them to be legally enforceable.
Remember that an addendum does not take the place of the existing contract; it only adds to or clarifies certain aspects of the purchase agreement.
The remaining portions of the purchase agreement are unchanged and stay the same.
An addendum is created during a real estate transaction before the parties sign the contract. Addenda modify a standard form contract and evidence unique elements of the purchase.
In contrast, amendments are used when you and the other party are already under contract or the purchase agreement is already executed.
All parties must agree to the additional or changed terms added to the executed contract.
When Do You Use a Real Estate Purchase Agreement Addendum?
Various situations call for a purchase agreement addendum. Addendum examples include, but are not limited to:
- Addendum for Other Property: You may include considerations for other property in a real estate transaction. An addendum can help detail the agreement for this type of transaction.
- Earnest Money Receipt: An addendum can document when a buyer must deliver an earnest money deposit and how much of a deposit the parties agree upon.
- Condo Association Addendum: Condominium sales have unique agreements, rules, and other factors that an addendum can address.
- Inspection Contingencies: Some addenda address a contingency based on an inspection by a third party. They outline the buyer’s rights depending on the inspection’s outcome.
- Closing Date Extension: Some real estate transactions require a little more time to close. Instead of altering the language in an original agreement or creating a new form, a purchase agreement addendum can extend the closing date.
- Owner/Seller Financing Addendum: An owner/seller financing addendum is common if the seller offers to finance the transaction instead of a bank. The document should include critical details about the financing, including the joint obligations of the parties.
- Termination Letter: In some cases, an original agreement falls apart and the parties want out of the contract. A termination letter addendum permits the parties to back out of the contract and end their original agreement.
Why Use a Purchase Addendum Form?
You use a purchase addendum to modify and expand on contract terms before a contract is in place, thus avoiding creating a brand-new real estate purchase agreement.
Creating a new purchase contract is time-consuming and expensive.
You can make necessary changes with an addendum without writing an entirely new document.
How to Write an Addendum to a Real Estate Contract
Writing the real estate purchase agreement addendum is an important step.
You must include critical information that makes the document legally enforceable.
1. Effective Date
The addendum will include an effective date for the modifications or expansion of the contract terms.
2. Party Identification
The addendum references the parties signing and agreeing to be bound to the contract. This will typically include all parties subject to the original real estate purchase agreement.
The addendum should identify at least the following:
- The full name of each party
- Each party’s official title, if any
3. Date and Reference to Original Purchase Agreement
The addendum should reference the effective date and details of the original real estate purchase agreement. References to the original contract are necessary to ensure the two documents are legally connected.
It is not sufficient to attach an addendum that does not refer to the original agreement.
4. Address of the Property
The addendum to the real estate purchase contract should include the address of the property that is being purchased.
5. Terms of the Addendum
The addendum should detail all the terms different from the original purchase agreement: changes, alterations, deletions, and additions the document is making to the original contract.
Furthermore, the addendum should reference the specific section or provision number in the contract affected by the change.
6. Preservation of the Original Agreement’s Remaining Language
In addition to the changes or additions, the addendum should include a statement that preserves the rest of the real estate purchase agreement.
It should state that the remaining terms and conditions of the purchase agreement remain unchanged and in full effect.
7. Executing Party Signatures
You and the other parties must sign the addendum, which includes the following:
- Each person’s legal name in printed form
- Signature
- Title, position, or other indication of representative status
Real estate purchase agreement addenda must meet specific requirements to be enforceable. Use Legal Templates’ step-by-step template builder to customize and create a purchase agreement addendum.
Real Estate Purchase Agreement Sample
Below is an example of what a real estate purchase agreement addendum looks like.
Real Estate Purchase Agreement Addendum Sample
real estate purchase agreement addendumFrequently Asked Questions
Is an Addendum the Same as a Purchase Agreement?
No. An addendum is a separate legal document that adds, removes, or changes any aspects of the original purchase contract before it is signed. Addenda do not replace existing agreements.
Addendum Versus Amendment in Real Estate: What’s the Difference?
An addendum adds additional information to a real estate purchase contract prior to it being signed. Amendments change specific terms of an agreement after it has been executed.
Can You Amend an Addendum?
Yes. There may be times when you need to make changes to the executed contract and existing addendum. You can document modifications in certain scenarios with an amendment to a real estate purchase agreement.