Roses are red,
Ink on contracts are blue,
it’s the middle of season,
which addendum is right for you?
When writing an offer, addenda specifically tailored toward the current transaction might be included. Picking the perfect addendum, like finding a Valentine, can be challenging and overwhelming. The FAR/BAR Contracts are dense and full of information, but they are not all-inclusive. There are approximately twenty-five FAR/BAR addendums that are commonly used when drafting a contract. With so many addenda in the contractual sea, it can be daunting to begin to play match-maker for your transaction. With Valentine’s Day right around the corner, this blog is for all you realtors out there that are looking for that very special addendum. Below are some of the addenda that might make your next contract’s heart skip a beat:
1) Addendum V. Sale of Buyer’s Property – As the market continues to trend towards a seller’s market and inventory is at an all-time low, many realtors are working with clients who are selling their property in order to purchase a new home. When the aforementioned situation arises, this addendum makes the Contract contingent upon the Buyer’s sale and protects the Deposit in the event their home sale does not make it to Closing. This addendum provides clear instructions as to when the home sale contingency expires, how a Buyer would utilize this contingency, etc.
2) Addendum H. Homeowner’s/Flood Insurance – This addendum provides additional protection to a Buyer by making the Contract contingent upon the Buyer obtaining homeowner’s and/or flood insurance. The addendum states that if the Buyer is unable to obtain homeowner’s insurance coverage (including windstorm) from a standard carrier of the Citizen’s Property Insurance Corporation at a set dollar amount or a percentage of the Purchase Price prior to a specified date (or defaults to ten days prior to Closing), then the Buyer may terminate the Contract by delivering written notice to the Seller and Buyer receives the Deposit. This addendum is useful for a cash buyer, a buyer who is purchasing an older home, more specifically with an older roof, etc.
3) Addendum U. Post-Closing Occupancy by Seller and Addendum T. Pre-Closing Occupancy Rider: Sometimes, closing plans do not go according to schedule and parties might opt to utilize a pre-closing or post-closing occupancy addendum. The Post-Closing Occupancy Addendum provides specifics as to who pays for the agreement, what the rent will be, the termination date, etc. It is prudent to have a real estate attorney prepare a transaction-specific Post-Closing Occupancy Agreement to be signed by both parties at Closing in order to finalize all details. The Pre-Closing Occupancy Addendum also provides specifics as to when the occupancy takes place and what buyer/seller’s roles are.
These few examples are by no means an exhaustive list. If none of the above addenda is causing your heart to flutter and you have questions about the other available addenda, be sure to reach out to your local real estate attorney for guidance.
Sincerely,
Mallory Moretti., mmoretti@berlinpatten.com
Berlin Patten Ebling, PLLC
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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