An addendum to purchase agreement is a document that is extensively used in real estate. It contains extra pieces of information which is attached to the main purchasing agreement. The extra pieces of information are further incorporated and deemed part and parcel of the original agreement.
Types of Addendum
- Closing Date Extension Addendum – This states the reasons, if any, which may necessitate the extension of the closing date.
- Condominium Association Addendum – In the case of the property being part of the condominium association, a copy of the rules, regulations, bylaws, and other vital agreements have to be supplied to the buyer for appropriate reviews.
- Earnest Money Receipt – It is an admission by the property seller, his agent, or other third parties that that specific consideration has been granted.
- Earnest Money Release – In case the buyer opts to nix the purchase agreement and goes ahead to withdraw his earnest money deposit, he drafts this addendum.
- Escrow Holdback Agreement Addendum – When a seller commits to effect a sale after closing, the funds to that effect will usually be held in an escrow until such a time that the sale has been concluded.
- Estoppel Certificate Addendum – Useful whenever the lender intends that the seller verifies the leases on the property. In this case, the tenant signs the estoppel having attached their leases.
- Inspection Contingency Addendum – Lets the buyer inspect the property first and foremost before committing to purchase it. His decision is hinged on the property passing a clean inspection typically by a third party.
- Seller Financing Addendum – Outlines in details, the financing terms to adhere to if the seller intends to advance some loan to the buyer.
- Short Sale Addendum – Showcases the terms of references which the bank or financial institution is willing to adhere to while leasing out his property to a potential buyer. These also include the time limits as well as other approvals which are needful to enter a binding agreement.
- Termination Letter to Purchase Agreement – When the time comes for the buyer and seller to official nix their agreements, they have to sign this and free them of any liability.
- Third (3rd) Party Financing Addendum – Just in case financing is required by the buyer to conclude a purchase, he has to sign this.
How do you write an addendum to a purchase agreement?
Writing a good addendum to a purchase agreement is definitely the first step in making the most of the document. You can only achieve this feat by following the due processes. We have identified the best ways forward. These are explained hereunder:
Step I: Obtain the original purchase agreement
Start off by obtaining the original purchase agreement. This is important as it forms the basis of any subsequent agreement or modifications thereof. You will also refer extensively to this original agreement as you draft another one in its stead.
Step II: Draft the addendum
Now get to the core of the step by drafting the addendum itself. For best results, we ask that you use a suitable template as a guide. While at it, be sure to incorporate the following details:
- Purchase Agreement Effective Date (for reference)
- Name of the buyer
- Name of the seller
- Property physical address
- Precise changes to the original agreement
Step III: Present it to the other party
After drafting it, you have to present it to the ‘other party.’ Let him review the agreement and see to it that it is up to standard. In case the other party has any issues which might require some alteration, this is the best time to point them out.
Step IV: Sign the Agreement
Having vouched for the satisfaction of the other party, it is about time to sign the agreement officially. The same parties who signed the original agreement are the ones required to sign the addendum too. If this is not adhered to, the agreement may become null and void.
Step V: Append it to the Original Purchase Agreement
Finish up by appending the addendum to the original purchase agreement. Retain two copies, one for yourself and another for the other party. Keep both copies until such a time that the property eventually switches hands.
Free purchase agreement addendum templates
What is FHA purchase agreement addendum?
Those homes that are acquired with funds from the Federal Housing Administration (FHA), have to be governed by the FHA purchase agreement of purchase. This FHA purchase agreement addendum plays the same role as the ordinary counterpart. It only limits itself to those homes that are purchased with funds from this federal agency.
What is an addendum when buying a house?
When buying a house, the original purchase agreement might never cover every concern or issue you have in mind. That is why you might need to attach additional information for the sake of taking care of these extra issues. It hence follows that ‘an addendum when buying a house’ is any additional piece of information which a home buyer or seller incorporates over and above the basic purchase agreement.