“Addendum” has no special legal meaning. If you look the word up in a legal dictionary, it will say the same thing it does in a regular English dictionary. An addendum is “something added.” That’s it! An addendum is something added to something.
Because the word “addendum” has no special legal meaning, the legal effect of a document entitled “addendum” will depend on the context in which the document is used, not what it is called. This simple concept causes no end of trouble in real estate transactions. Addendums, and addendum forms, are used for all kinds of different purposes in real estate transactions. It is the confusion among those purposes that causes trouble.
Addendums are attached to offers and to counter offers as well as to contracts that have already been formed. Addendums are used to give notice, make disclosures, communicate waivers and even just to make a request of the other party. There are special purpose addendums like the lead-based paint addendum. Addendums are also used to create special contingencies for financing, title inspections and more.
Formation Addendums are used to add additional terms to an offer or counter offer. Addendums used to create special contingencies or otherwise modify the terms of existing agreements are Mutual Agreement Addendums. Agents will often use an addendum form to make disclosures, give notice or make waiver statements. Such Single Party Addendums can cause significant confusion if they are mistaken for formation or mutual agreement addendums. Finally, there has arisen in recent years broker-generated addendums, Disclosure Addendums or Do Nothing Addendums, that make various general disclosures about real estate without having anything to do with the transaction to which they are attached.
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