Addendums to Real Estate Contracts
Most residential real estate transactions in Florida start with the “AS IS” contract. This contract is in its sixth version and covers many of the issues that arise during a real estate purchase/sale. However, the contract would be too burdensome if it covered all types of sales and/or situations which can arise. To address more specific scenarios, there are two types of addendums to real estate contracts:
1. STANDARD ADDENDUMS
The first is the “Standard Addendum”. These standard addendums, for issues such as condos, Buyers that need to sell their home before the purchase of the new home, and appraisals are standard in the industry and there is a place on the “AS IS” contract to check off that the specific addendum is being executed at the same time as the contract. These standard addendums have much of the substance of the addendum already written and the Buyer/Seller or real estate agents fill in the blanks provided.
2. CUSTOM ADDENDUMS
The second type of addendum is a “Custom Addendum”. There is a form in Florida for such addendums which helps the buyer/seller and real estate agents prepare the addendum. However, the substance of the addendum is not included and therefore it must be written by the parties to the contract, their agents and/or real estate attorney. These addendums are used for any situation not covered by the original contract or standard addendums. They can be used for simple issues like extending a closing date or may be complicated, multiple page documents, detailing the rights and responsibilities of each party to resolve sophisticated issues.
It is important to note that both types of addendums change the terms of the original contract. It is therefore extremely important that Buyers and Sellers understand the terms they are agreeing to and how those changes modify their financial responsibilities and the time requirements of the original contract. It is also important that custom addendums are written with unambiguous language that clearly defines the new agreement of the parties. It is strongly advised that Buyers and Sellers consult a real estate attorney before creating and/or executing a custom addendum.