Real Estate Contract Law - Addendum or Amendment

With amendments and addendums, it's all in the timing.

Two terms that have been used incorrectly by some real estate agents and brokers are the addendum and the amendment. Though both can modify the content or terms of a real estate contract or purchase agreement, it's a matter of when you're doing it that dictates which is used.

You're a real estate agent that's preparing a purchase contract or agreement for your buyer clients. They're buying a home with the desire to place a home legal practice office in the residence. At the time of the submission of the offer, it's not clear from documents in hand if the local ordinances will allow this legal office in the residence. In this case, you might prepare an addendum to the contract stating that the purchase is contingent upon verification to the buyers' satisfaction that they can have the legal office in the home. The key to the use of the addendum is that it is made a part of the original offer submitted and if the offer is accepted, it will be part of the agreed terms.

You've gotten the purchase agreement accepted, all parties have signed, and you're moving forward toward closing. A survey turns up an encroaching fence built by a neighbor. The buyers would like the fence moved prior to closing to eliminate the problem. If this is to be made a part of the agreement, then the contract must be amended. The key here is that we already have an agreement, signed and sealed. This is a change, thus an amendment.