November 22, 2021 at 11:37am | Bob Myers
If you’re buying a home, you might hear your title company refer to writing an addendum to your contract. In the back of your mind, you might be aware of the concept of an addendum — it means a supplement, an addition, or a kind of postscript to a document. But what does that mean in terms of a real estate contract? How much of a role does an addendum play, and why would a title company be writing one?These are all important questions to ask. And the truth is, there’s no one-size-fits-all answer. This supplement can take the form of just about any document that needs to be added to the purchase or sale agreement, including anything that was left out at the time the original contract was drafted. In some cases, this is at the request of the buyer or based on input or guidance from the buyer’s support network, such as their real estate agent or their title company.

What are some reasons for an addendum? 

A few of the most common ones include:
  • Adding the correct parties to the contract
  • Any contingencies that would affect the purchase of the property
  • Any financing details that are relevant
  • Any disclosures that need to be made about the property
Strictly speaking, anyone who is involved in the real estate transaction can write an addendum.  Most often it is the agents that draft the addendums.
It’s important to note that an addendum is most often an agreement between the parties made after the original contract is executed and supersedes the original terms of the contract to the extent they are modified. Note, the addendum must still be signed by all parties to be an agreement.
In the case of an amendment, a specific line within the contract is changed (or amended) and again, as long as it is agreed to by all parties, supersedes the original terms of the contract. Sentences or paragraphs are struck out or revised in some capacity. Take caution when making an amendment to the contract by striking out or revising as this changes the standard form contract which is what most agents are most familiar with. An amendment can create difficulties in the long run. Strikeouts and line revisions can be difficult to read, and any illegibility could mean legal problems if there’s any dispute about what the document says.
Consider some of these reasons that someone involved in your real estate transaction might draw up an addendum:
  • There is a missing party to the contract -- i.e. title shows another owner or buyer did not add a party they want to be included.
  • The seller has produced documents from the homeowners association. These rules and regulations about the community will put some restrictions on what a buyer can do with their property once it is in their hands.
  • The buyer requests that certain appliances remain in the home when the property changes hands. Things like a washing machine, dryer, and refrigerator should be specifically stated as staying with the house when it is sold. This is important when a house has multiples of an appliance — maybe the refrigerator in the kitchen will stay with the house, but the buyer requests the fridge out in the garage be moved out with the seller. The same goes for houses that have a washer and dryer on the main level and a second set in the basement in-law suite.
  • An addendum can also be considered a contingency.  For instance, the buyer must be able to secure a loan for the property. If the buyer is unable to secure a loan, depending on the reasons, then the buyer may be no longer locked into the contract or required to follow through with the purchase. 
  • The seller states that the property will be sold “as is,” meaning no repairs will be made before the property changes hands. When the seller is a person, it’s easy enough for a buyer to request certain updates be made (for example, a hole in the wall be patched up, or a broken window be replaced). But when the property is owned by a bank, then the bank as the seller reserves the right not to put any time or money into fixing up the condition of the property.
  • An addendum might state that anything found during the inspection must be either fixed by the seller before closing or that it becomes the responsibility of the buyer after closing.
Because an addendum has so much power in shaping the way a real estate transaction unfolds, it’s important to make sure all requests are legally sound and don’t have unexpected implications that would negatively affect how future owners enjoy their new property.

Navigating the complexities of a legal, thorough real estate contract, including all its addendums, can be an overwhelming challenge, especially for somebody who doesn’t know what to pay attention to. If you need guidance as you prepare to close on your first home, our trusted partner, Flynn Title, is happy to support you. Reach out to them by calling 301-545-0150.

Please consider The Myers Team your resource for all things real estate.  We have over 35 years of real estate experience, specializing in (but not limited to) the Montgomery County area.  If you are refinancing, want a recommendation, need a service provider or just have a home related question, please give me a call at  301-910-9910 or email me at bobmyersteam@gmail.com.  
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