If you need to edit an agreement to reflect the most recent terms and conditions, you may need to use a contract addendum or contract amendment. An addendum clarifies or adds missing terms, while an amendment allows for changes in the existing terms. Understanding these documents lets you write real estate purchase agreements, leases, and business contracts that work for you.
What Is a Contract Addendum?
A contract addendum is a separate document that adds new terms or information to a contract. All parties must agree to and sign these new additions to the original agreement. The addendum provides new or supplementary information and does not replace or change any part of the initial agreement.
Addendums can be useful in many situations, including the sale of real estate. For example, you may need to add contingencies that dictate the circumstances of the sale. In this case, you can use Legal Templates’s real estate purchase agreement addendum to create a document with the new terms. Start our 7-day free trial to access our library of lawyer-approved forms.
What Is a Contract Amendment?
A contract amendment is a way to change the terms in your initial agreement. An amendment can add changes and works to alter, add, replace, or remove terms from the original contract. Amendments do not replace or cancel the original agreement. They leave the original agreement primarily in place except for the specific details the parties agree to alter.
For example, if you can no longer be present on the closing date, you can use a real estate purchase agreement amendment to change it. Your amendment replaces the date while maintaining the rest of the initial contract.
You can create an informal amendment with strikethroughs or annotations on the contract as long as all parties sign it.
Addendum vs Amendment: Key Differences
An addendum and an amendment work to update an existing contract to meet your needs. Understanding how their uses, timing, and creation differ helps you choose the right one for your situation.
When to Use
An addendum is most useful when expanding on the contract’s existing terms or adding new terms that do not appear in the original document. It can clarify vague or missing information in a lease, business agreement, or purchase contract.
You can use an amendment when you want to alter existing terms for a current contract. For example, if the current lease agreement has a no-pets policy, an amendment can allow for animals.
Timing
An addendum can be created either before or after the execution of the contract. You can create this addendum to provide supplemental information or contingencies. You can also add an addendum after the contract goes into effect to add extra parties, terms, and considerations.
An amendment comes after the initial execution of the contract. The amendment allows you to change the terms that are currently in effect. You can extend the timeframe, add parties, or remove restrictions.
Creation Process
Contract addendums and amendments have a similar creation process, but they have a few key differences.
Since an addendum doesn’t remove or alter any of the original terms, the language focuses on adding information. This means that the writing might not directly refer to the original agreement. On the other hand, an amendment will use language to refer to and negate or alter the text of the contract.
The different actions and purposes of an addendum and amendment also make it crucial to identify the correct format. Using the right form provides the correct information to change your desired terms.
An addendum requires a new document, while an amendment can be either separate or combined with the existing agreement.
Uses in Real Estate
In real estate, both addendums and amendments help to clarify, adjust, or enhance the terms of agreements. Some use cases include:
- Real estate purchase addendum: This includes terms not initially in the agreement, such as an inspection or guarantee of the home’s condition.
- Real estate purchase amendment: An amendment can update the terms of a real estate deal to change the price or closing date.
- Lease agreement addendum: Landlords use pet policy and lease extension addendums to create flexibility.
- Lease agreement amendment: This amendment lets you edit the lease to change the rent amount or allow subletting.
Uses in Business
In business, addendums and amendments help to change terms, clarify responsibilities, and ensure compliance. Common use cases include:
- Amendment to LLC operating agreement: An LLC’s operating agreements may need amendments to change management, members, or responsibilities.
- Amendment to articles of incorporation: This amendment reflects changes in business address, corporate officers, or stock structure.
- Partnership agreement amendment: A partnership agreement amendment can add new partners, change profit-sharing, or alter decision-making processes.
- Commercial lease addendum: This addendum adds considerations for extending, refinancing, or modifying commercial lease terms.
| Document type | When to Use | Timing | Creation Process | Uses in Real Estate | Uses in Business |
|---|---|---|---|---|---|
| Addendum | Clarifying existing contract terms | Before or after contract execution | Write & add a separate document to the original contract | Add new terms to leases, real estate purchase agreements, etc. | Add new terms to commercial leases or business contracts |
| Amendment | Changing, removing, or adding to existing terms | After contract execution | Informal amendment with strikethroughs/annotations Formal additional document | Update existing terms to leases, real estate purchase agreements, etc. | Update existing terms in LLC operating or partnership agreements. |
Who Can Write an Addendum or Amendment?
Any party may propose or write an addendum or amendment. This includes third parties such as title companies, inspectors, or agents. Third parties often draft documents for title discrepancies, property inspections, or insurance requirements. While these third parties can help with drafting, only those bound by the original agreement can enforce the terms.
While a third party may help create an amendment, they are more often written by the parties involved in the original contract. All original parties must agree to the amendment to ensure a mutual agreement from everyone bound by its conditions.
A third party can be added to addendums, but it requires the agreement and signatures of the existing contract’s parties and the third party.
Choosing Between an Addendum & Amendment
When choosing between creating a contract addendum or amendment, consider the purpose. An addendum adds more specific information, while an amendment changes an existing contract.
Determine whether the contract is already in effect, in which case an amendment offers a better way to change the conditions. If the contract has not gone into effect, an addendum can help ensure it has the information you need.
Other Related Forms
Similarly to an addendum or amendment, you can create forms to clarify, change, or complement a contract. Related forms include:
- Appendices: These are supplementary parts of a document that provide extra information and remain separate from the document’s terms.
- Change order forms: This allows the parties involved in a project to modify and track a project’s scope, budget, and timeline.
Frequently Asked Questions
Do I have to get an addendum or amendment signed?
Yes, both an addendum and an amendment need the signatures of everyone on the original contract. Any parties added to the contract must also sign. If a third party aids in the creation of an addendum or amendment, having them sign can increase the legal validity.
Can an amendment replace or cancel the original contract?
An amendment may replace or remove a part of a contract, but it upholds the rest of the original terms. If you need long or multiple amendments, it may be more effective to terminate the contract and create a new one.
What happens if an amendment conflicts with the original contract?
If an amendment conflicts with the contract, the terms of the amendment override the original agreement. As long as all parties have agreed and signed, the amendment’s terms serve as legally binding.
Can you add an amendment to an addendum?
Yes, you can add an amendment to an addendum if you need to change the terms explained in the addendum. In this case, ensure that all parties sign off on the amendment and agree to the changes being made.
