Understanding Purchase Agreement Addendums: Samples in PDF Included

What is a Purchase Agreement Addendum?

An essential aspect of real estate and business transactions that most businesses and individuals, in general, encounter is an addendum and/or a modification of the original agreement. Such is the case with a purchase agreement addendum. A purchase agreement addendum is basically a change that is made between parties to a purchase agreement to an existing purchase agreement after the original contract has been signed and is intended to modify one or more of the provisions of that agreement. Both parties must mutually agree to the addition of this modification, otherwise, there is no purchase agreement addendum . When a person sets up a purchase agreement with a seller (or vice versa) they do not always get all the specific details they want in their contract, meaning they may need to make changes or additions before closing on it. The agreements may need to be modified regarding price, closing date, date of possession, repairs requested, contingencies for either side completing under the contract, and/or any number of other reasons. Rather than starting from scratch, a simple addendum will usually suffice. And the addendum can help with any number of other issues that may arise throughout the process up until closing.

Key Components of an Addendum

As the name implies, a purchase agreement addendum is a document that is added to an existing purchase agreement. There are specific elements that are critical to the validity of the addendum: Making changes to a purchase agreement is often a considerable source of anxiety for buyers and sellers. Changes to the original agreement may include: When a purchase agreement is modified, an addendum must be used. Modifying an existing contract without using an addendum is considered completely invalid; the contract on the original purchase agreement becomes void.

When to Utilize an Addendum

A purchase agreement addendum is typically used if a buyer and a seller need to amend the original contract. That includes situations in which terms change, the dates need to be extended or if additional agreements are required but were not included in the initial purchase contract. The addendum basically clarifies any and all contracts between the two parties.
For example, if the home inspection identified a problem with the roof and it was agreed that the seller would pay for the replacement of the roof prior to closing, an addendum to that effect would be needed. Likewise, if the parties agreed that the closing date should be pushed back a bit after the contract was signed, a purchase contract addendum would be needed to provide specific dates.
Sometimes, the addendum is actually a separate and necessary contract, such as putting a house under contract and also putting down an earnest money deposit. This is a more moot point because a purchase contract and associated addendum can be packaged into a single form, but the distinction might matter to certain parties involved in the transaction.

How to Write an Addendum

To help the parties in reaching agreement to modify their original contract, all addendums should include the following elements: (1) the creation and reference to the original contract; (2) a specific identification of the provision(s), paragraph(s), section(s) or clause(s) in the original contract that are amended or supplemented; (3) a specific statement of the modification or changes in the performance of the obligations of the parties; and (4) the signature of all parties to the original agreement. Here are some additional thoughts on how a party can ensure that the addendum is clear, comprehensive and enforceable to reduce the potential of litigation:
The language of the addendum should be in the same style and form as the original contract to promote uniformity. The format of the addendum should be the same as the original contract. This means that a seller’s addendum to a residential sales contract should be identified in the same way as the residential contract for sale. For example, are the contracts in paragraph number order? In other words, does the contract start with paragraph 1, 1.1, 1.1.1., 1.1.2, etc.? If so, does the first section of the addendum start with paragraph 2, 2.1, 2.1.1, 2.1.2, etc., and so forth? Each paragraph of the addendum should be numbered in the same format as the original residential contract for sale. For example, if the contract starts with paragraph 1.1, 1.1.1, 1.1.2, etc., does the first section of the addendum follow the format of paragraphs 2, 2.1, 2.1.1, 2.1.2, etc. If the original residential contract standard form contract does not use decimal numbers for the paragraphs, then the addendum should follow the numbering format of paragraphs 1, 2, 3, 4, etc. An addendum should be drafted with specific references to the provision, paragraph, section or clause being modified. If the modification only applies to one section of the original contract, the addendum should state that it only applies to that specific section. The goals should be to draft an addendum that will clearly adjust the parties’ obligations under the original contract to the new facts without creating any confusion or ambiguity. If the addendum is too vague, there is a good chance that a dispute or at least confusion about the parties’ obligations will result. Courts will not enforce an addendum that is so vague and ambiguous that no reasonable person would know how it modifies the original agreement.

Legal Requirements in an Addendum

Legal considerations for addendums can cover a number of issues. Your addendum must be in compliance with the laws where the property is located . You may also want to monitor what is in the addendum that remains in effect, and make sure it is correct. In addition, obtaining appropriate approval can be an important part of the addendum process.

Printable Addendum PDF Templates

We’ve prepared some of the most common type of purchase agreement addendums and put them in downloadable PDF format for a simple read. You can easily download the file, read it on your computer or print it out immediately.
Our sample addendums offer a great resource to view a well written real estate purchase typo agreements so that you can decide how you want to draft your own. Much like some of our other downloadable forms, you can easily copy elements from these samples and change them to follow your own desires.
Eventually we will have a list available to you so that you can pick and choose from a multitude of addendums:
Real Estate Purchase and Sale Addendums
Agreement of Sale and Purchase Addendum
Adding an Advertising Clause to a Real Estate Purchase and Sale Agreement
Addendum Requesting Repairs Prior to Closing
Real Estate Lease and Purchase Options Addendum
Real Estate Purchase and Sale Agreement Addendum Short Form
These are just some of our download real estate addendum forms.

Common Mistakes to Avoid

One of the most common mistakes is failing to have the addendum signed. When a real estate purchase offer is made, both the offeror and offeree are required to sign it. So too with an addendum. The critical factor here is that regardless of the severity of the changes or modifications, whether they involve a reduction on the selling price or an extension of the closing date, will not matter if the parties fail to sign and date the addendum. Agreed-upon modifications may be ignored, if the addendum has not been signed.
Another common mistake is failing to date the addendum. Having any type of contract signed but not dated can lead to unnecessary legal disputes down the road. In all cases, an addendum should be thoroughly vetted and carefully reviewed, ensuring that all parties sign and date the additional clause or clauses. Failure to meet this simple requirement could void the addendum, regardless of how long the two parties have known one another or how long they have been conducting business with one another.
A third common mistake is referencing the addendum as an attachment or exhibit to the original agreement. With regard to contracts and other written agreements, the terms and conditions of the extension or modification should be included in the main body of the agreement, and not as an appendix, addendum, or similar attachment. If no such change in the language is made, the buyer or seller may get stuck with the original provisions in the contract. It is also a good practice to number each page of the addendum, just as you would number each page of the original contract.
Technically, an addendum is a modification of a contract, while an amendment is an addition to an existing contract. Nevertheless, the terms of these words are often used interchangeably. What is most important to remember is that providing documentation is required to modify, amend, or extend an original agreement. It cannot be assumed by either party that the agreement has been amended or modified.

Addendum FAQs

Are purchase agreement addendums enforceable?
It will depend upon the intentions of the party as well as the facts and circumstances surrounding the creation of the purchase agreement addendum. Courts prefer to enforce the intentions of the parties to the best they can. However, as with all things in the law, such a question cannot be answered with broad strokes or shades of gray.
Are purchase agreement addendums different than amendments?
A purchase agreement addendum usually adds to or adds upon as opposed to amending what the provisions already are. In fact, many courts look to purchase agreement addendums as something more enforceable than a mere amendment. An amendment, on the other hand, typically modifies what’s contained within an existing purchase agreement .
How do I enforce a purchase agreement addendum?
As with many things in contract law, it depends. One must look at the intent of the parties, as well as the facts and circumstances. Not every purchase agreement addendum is the same, so one must consider such factors. The opinions of the parties as well, including what they say about the purchase agreement addendum, might be taken into consideration as well. Such opinions could either aid or hinder enforcement.
How do I resolve a dispute over a purchase agreement addendum?
Such a dispute will generally need to be resolved wherever the settlement ends up occurring. Depending upon what the dispute is and its complexity, as well as other factors, might dictate the forum in which the dispute is to be resolved.