Real Estate --- The Contract addendum
Addendum, amendment, addendum, amendment. Seems like a tongue
twister right? Well the two terms mean completely different things.
It’s important to understand what an addendum is because if you use
the wrong word, it could change the course of your contract.
Let me first explain amendments. An amendment is an alteration of
the original agreement. This can be any thing from price to when the
seller vacates. For instance, an amendment can be used to during
negotiations to counter an offer already made. An example would be
the buyer has offered to pay X amount of money for the property with
the following circumstances. Things like the kitchen appliances stay
and so do the laundry room ones. The seller can add an amendment
which states the washer is going but every thing else stays.
An addendum is part of the original contract. It is another section
or part which is very specific in what it says. For instance if the
buyer is making an offer on a farm, he or she may want to explain
the terms in more detail. Terms like what is to happen to the crops
already planted, or if any of the farm equipment stays can be
clearly marked out in an addendum.
The addendum becomes part of a legal and binding contract. The
amendments are parts of a contract still in negotiations. The
addendum will stand up in court. The amendments will just show what
everyone was considering. If you ever did have to go to court over
the contract, it is a good idea to have both the final copy, with
the addendum, and the rough draft with the amendments. It can give
the judge a better idea of what was trying to be represented during
the formulation of the contract.
A contract can have many addendums. Each one can be specific about
certain aspects of the sale. Think of them as if then clauses. For
instance, if the water supply in the well is not potable but safe
for other uses, the buyer can state that the seller must drill a new
well. The addendum can specify where the well is to go and who will
drill it. Amendments can be made to an addendum which states, in
this case, the well driller will determine where the well is to be
Because an addendum is a legal and binding part of a contract, you
must choose your wording carefully when adding it to the original
contract. The addendum to a contract can include just about anything
either party wants to clarify. It is crucial to realize the original
contract should also incorporate wording such as “see attached
addendum” or “addendum attached” so that there is no dispute later
on should a question come up. There have been times the wording was
not in the original contract and the addendums not attached to the
documentation when a case was presented in court. This caused the
courts some concern as to what was valid and what was not allowed.
In the end, the addendum did help to win the case. However, if the
single phrase “addendum attached” had been in the original contract
there would have been no questions.
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