A purchase addendum is a written document that modifies or supports an existing contract or agreement. An addendum is attached to an original contract and executed simultaneously. This makes an addendum a part of the original agreement or contract. Depending on the purpose, addendums can be broad or specific.
Addendums usually contain requirements or information that is not fully spelled out in the original contract. Modifying an agreement without creating and attaching separate written documents is not an addendum but an amendment.
Addendum to Purchase Agreement (Templates and Examples)
Types of Addendum
Addendums make a contract or agreement more streamlined, easier to read and execute. An addendum is either a proposed change in an existing contract or a more detailed explanation of something that is already covered in the original document. They are attachments to an agreement that modify the terms and conditions of original contracts.
Types of addendums include the following:
- Inspection addendum. An inspection addendum in a contract is an attachment or clause that allows the buyer to inspect the property. Anything discovered during the inspection needs to be repaired or replaced by the seller before the sale contract is deemed complete.
- Septic addendums. The septic addendum typically accompanies every sale contract or agreement for a property with a septic system. The addendum highlights or sets out deadlines when necessary inspections for a septic system should be performed.
- Sale of property addendum. A sale of property addendum may contain details such as the sales deadline. The property cannot be sold once the deadline has elapsed. Another example is an addendum that includes contingencies. A common example stipulates that to complete the purchase or sale transaction, the buyer must first secure a loan.
- Real estate addendum. Often, real estate sales contracts come with several addendums added as the seller and buyer agree on additional sale terms. This kind of addendum provides more details about the property and sale transactions.
The home seller, for example, may agree – after the initial sales agreement has been written and signed – to include furniture for an extra specified sum.
Lead disclosure for properties built before 1978 is required to alert the new owner. Property disclosure statement discloses any material defects known by the seller or if the property is located in a special zoning.
A buyer may sometimes encounter an addendum in a purchase contract that states, “As-Is.” Such an addendum implies property is being sold or bought in its current condition. The seller is under no legal obligation to undertake any repairs.
How to Write an Addendum to Purchase Agreement
Writing an addendum to an agreement is very crucial as it clarifies issues not included in the original contract or new modifications to an agreement. It is typically added to the original contract as an attachment. If unsure of whether your addendum complies with the terms and conditions of the existing contract and whether it’s legally enforceable, you may want to consult an attorney.
The following steps and guidelines will assist you in writing an addendum to an agreement or contract:
Formatting: When writing an addendum, use a font, style, and formatting that is consistent with the original agreement so that the two documents are visually similar. This helps show that the two are related and not distinct documents.
Contract parties: Be specific when it comes to naming all associated parties. For example: This contract addendum is between John Smith (“Seller”) and Jane Doe (“Buyer”).
Addendum date: State the date when the addendum comes into effect. Ensure it is specified in a way that is consistent with the initial agreement/contract.
Contract modification details: List the sections and terms of the original agreement being modified by the addendum. Make sure that you are specific, concise, and thorough in describing all contract modifications. Attach the original document to the addendum and state in the new addendum that this step has been completed. This ensures there is a clear distinction between which one is the original contract and which is the new addendum.
Signature: Include a signature block, a blank space to insert the date when the addendum will be implemented. This also includes lines for all the parties involved in the contract to sign their names beside their printed or typed names.
Does an Addendum Need to be Notarized?
Unless they are written in compliance with the original contract terms, addendums are not legally enforceable. Each party signing an agreement may be notarized to prove that they did append their signature on the contract. Similarly, all parties who appended their signatures on the original contract agreement must also sign the new addendum.
If one or more contract parties are unavailable, they are allowed to appoint agents to sign on their behalf. Include a blank space where the signatures may be notarized, as that is just as important as the space for the signatures.
An addendum is added to an existing written document – typically a contract or agreement. Once the writing is finished, the addendum is signed and notarized, then attached to the original contract. By attaching the two, anyone else looking at the document will know that there is more to it than just the original agreement/contract.
An addendum is not enforceable legally unless all the parties fully understand the new contract terms and agree by signing the addendum.