What's the Difference Between an Amendment and an Addendum?

By
Real Estate Agent with United Real Estate TX #0552717

What's the Difference Between an Amendment and an Addendum?

Real estate agents are not attorneys. We cannot practice law. But we should know the difference between an amendment and an addendum. Both the Texas Association of REALTORS and the Texas Real Estate Commission make it very easy for us to tell the difference. The word "amendment" or "addendum" is included in the title of the forms we use and the title of the form is printed across the top of the first Amendment vs Addendumpage of each form. Yet agents still confuse the two words.

Here's an easy way to remember the difference:

  • Addendum
    • "Add" is the first part of addendum.
    • An offer is not complete unless all additional parts of required paperwork are submitted and before the contract is executed. What are these additional parts?
      • Examples:
        • Addendum for Seller's Disclosure of Information on Lead-Based Paint and Lead-Based Hazards as Required by Federal Law (for homes built before 1978).
        • Third Party Financing Addendum for Credit Approval (for buyers with conventional financing who do not waive the financing contingency in paragraph 4(A)2(a) on the TREC or TAR form, and for buyers using Texas Veterans Loans, FHA Loans or VA Guaranteed Financing Loans).
        • Addendum for Property Subject to Mandatory Membership in a Property Owners Association.
      • These and/or other forms, plus (or added to) the offer on the "contract" form complete the offer.
      • Technically it's not a contract until both sides agree in writing and the paperwork is executed (dated) by the agent getting the last signature or initial.
      • So, an addendum (or addenda, the plural) is/are included with the offer and become part of the executed contract.
  • Amendment
    • "Amend" (meaning change) is the first part of amendment.
    • "mend" (meaning fix) is also part of amendment.
    • "Amen" (said after prayer) is in there, too.
    • An executed amendment changes parts of an already executed contract.
      • Examples:
        • Changing the closing date.
        • Changing the sales price (maybe due to conditions found during inspections, or as a result of a low appraisal, etc.)
        • Changing the amount of money the seller will contribute to the buyer's closing costs.
        • Specific repairs to be completed before closing.
        • Extending the option period or financing period.
      • An amendment does NOT void the already executed contract in Texas.
      • All parties must agree in writing to the changes in an amendment. That's why you might say "Amen" when both buyers and sellers sign off on the amendment.
      • If both buyers and sellers do not agree to the changes in the amendment, the executed contract stands. The buyers could choose to terminate the contract or live with the specifics in the executed contract.

To sum up, an addendum is in addition to the offer paperwork, signed and executed with the contract. An amendment is a change to the contract that is made AFTER the contract has been executed.

Got it? Any questions?

Posted by

Lorrie Semler, e-PRO, GRI, SRES, CPRES, CRS
Addison Resident/Addison Specialist                                                      Subscribe Button
Real Service. Real Results. Real Estate.
United Real Estate
972-416-3417

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Rainmaker
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Teral McDowell
Referral Patners LLC - Murphy, TX

Great explanation you provided Lorrie; didn't think about a need for this one but you said it so well I may reblog.

Aug 20, 2013 02:13 AM #1
Rainmaker
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Lorrie Semler, REALTOR® in the Dallas area. Call/text 972-416-3417
United Real Estate - Addison, TX
Real Service. Real Results. Real Estate

Teral: Thanks for the reblog!

Aug 20, 2013 03:15 AM #2
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Rainmaker
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Lorrie Semler, REALTOR® in the Dallas area. Call/text 972-416-3417

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