You might already have a contract and now you want to change something in it. A contract amendment is any change that is made to an already ratified contract. Amendments can even be added before closing is official.
A contract amendment is any change that needs to be made to a contract. It is usually a separate document that is added into the file with the original contract. Similar to the contract, any amendments need to be signed and dated by both parties to make them official.
Amendments are the only way to add something to the contract legally and officially.
Hopefully, after you sign a contract and everything is sealed, there are no problems. However, every once in a while, something happens where a new contract is needed. While some problems before closing can be fixed with an amendment, not everything can.
The most common reasons are appraisal issues, a problem with the loan, or the mortgage is not approved.
Appraisals can come up with a value that is below the agreed selling point. No matter the difference, big or small, an amendment will be needed. If the amount is very significant, negotiations might need to take place again.
If the loan type changes or the down payment amount is changed, an amendment will need to be added. The loan and payment type are always listed in the original contract, so changing them can cause issues. If there needs to be a new closing date, this will also need to be noted.
Adding anything new to the home will also need to be in the contract. For example, maybe the seller was originally taking the outdoor grill with them, but the buyer now wants the grill because there are some broken fixtures in the house. It’s viewed as a trade because it is often easier than adjusting the purchase price.
One of the biggest amendments comes with the mortgage. This printable purchase agreement form is often drawn up and then the buyer doesn’t get the mortgage amount they were pre-approved for. Maybe the lender or loan company checked their credit or other numbers and decided not to give them the original loan amount.
The main difference is that an addendum is part of the original contract, not a separate document. It is executed, filed, and signed all at the same time. It can be added if the buyer or seller believes that something was not made clear in the original agreement.
There can be a wide variety of reasons for an addendum, but the main ones usually have to do with the inspection, water, or property tax.
Some people choose to put the inspection into an addendum. This includes the last date for the inspection to be valid, the date of delivery for the inspection report, or any negotiations that happen after the inspection.
If you buy a home in a rural area, you might need to add an addendum about the septic or water well. This will often include the maintenance, the water supply, and the inspection contingencies. It should also cover who is charged for related expenses and routine work.
Some other common addendum reasons are:
If you have been working with a lawyer, always ask if you think there needs to be an addendum.
Amending a purchase agreement might seem like a big deal or hassle, but sometimes it is not as difficult as it may seem. The most important thing is that both parties are on the same side, and everyone comes to an agreement.
Your lawyer can advise you on the best practices and solutions for adding amendments.
The most important part when it comes to amendments is the negotiation. Sometimes the buyer and seller can’t agree on the new amendment or the stipulation and the deal has to be closed. Try to avoid this as much as possible.
Always try to negotiate as much as possible without compromising too much. If the change is too significant for you, begin discussing ways with your lawyer to void the contract and move on.
Drafting the contract amendment is the first time you will be putting it into writing. You will need to ensure that everything is listed and clearly written out. Most people also work with their lawyers during the drafting process.
Both parties need to know exactly what is on the contract before signing. Most of the time, the buyer and seller will review it in full before they meet, close the amendment and sign it.
The signing is when the buyer and seller will meet and sign the new document. The lawyer will typically be present as well when the parties meet. Sometimes, the parties do not meet in person and will meet separately with their lawyer.
Each amendment is a little different, but many have some of the same parts and clauses to make signing easier. Follow the below template and recommendations below to make sure nothing is left out of your contract amendment.
The parties are the buyer and seller. This is not the same as the signature section. The parties section will list your name, address, and any other identifying information. This is especially important if you think you may need to contact the other party later. The information has to match the original party information on the contract.
The existing contract will always be included with the amendment. However, it is still a completely separate document, unlike an addendum. You will want to keep a copy of everything and file it all together.
The next page will be the amendment. It will have everything clearly listed out and written. Make sure that everything is stated and correct.
The new date will be the date you sign the amendment, not the purchase date or the closing date from the original contract.
The new amendment will need new signatures even though you have them on the contract. Make sure that the buyer and seller sign and print their name.
The template for the amendment is very small and short in most cases. Remember that each item being amended will need to have a separate amendment document. Therefore, the original contract may have several amendments.
In the first section, you will need to fill in the date you are filling in the amendment document. Then, the name and mailing address of both the buyer and the seller should be identified.
Write the date of the original agreement in the first line followed by the address of the land or real estate that was sold. Under the amendment section, write out the discussed amendment in full. Read through the other clauses to make sure they make sense, but you won’t need to write anything in.
Sign the template and official document and make sure the other party does the same. Contract amendments usually don’t have to be signed at the same time, but always follow up with the other party to make sure everything is done.
You will need to use your official signature, printed name, and the title you go by.