Real Advisor -Buying Guide For Homes & Real Estate Information San Francisco Bay Area

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An addendum is a document used to make changes and/or additions to the contract after the buyer and seller have a contract. Some addenda may already be stipulated in the contract, and all addenda should be mutually acceptable to both buyer and seller. The following are the most commonly used addenda: Document receipt Provided by the seller or listing agent to the buyer, the document receipt contains disclosures and other documents pertaining to the property. "As is" addendum Normally generated by the seller, the "As is" addendum can also be written by the buyer at the time an offer is made. This addendum to the contract stipulates that the buyer agrees to purchase the property in its present condition, without warranty from the seller. This addendum may or may not have exceptions, but in either case, should be clearly defined. For example, a buyer may take the property in its "as is" condition, subject to termite work made by the seller. One exception that should generally be included is for the seller to remove from the property all personal belongings and debris not included in the sale. A buyer planning to obtain a loan for 90 percent or more of the sale price (standard in VA or FHA loans) should check with his or her lender, to be sure the loan conditions permit buying the home in its "as is" condition. Buyer's designation of inspections The selling agent should give the buyer the option to decide which inspections and/or reports the buyer wants before purchasing the property. This not only allows the buyer to arrange all the desired inspections, but also protects the selling broker from potential litigation by the buyer for any defects that the buyer finds after the closing. Contingency removal This document, generated by the buyer, is a statement that the buyer - after obtaining loan approval and finding the condition of the property satisfactory - agrees to proceed with the purchase of the property according to the terms and conditions of the contract. After reviewing all the inspection reports and disclosures, the buyer may remove any property contingencies, subject to the seller's repair of items that were agreed upon in the contract or discovered during inspections. The contingency removal makes the buyer potentially liable for liquidated damages if he or she defaults before closing escrow. Receipt for increased deposit and liquidated damages This is a buyer-generated document that binds the buyer to immediately pay into escrow an increased deposit for an amount provided for in the terms and conditions of the contract. Liquidated damages - whereby the buyer agrees to let the seller retain the deposit amount (to a maximum of three percent of the purchase price) for breach of contract if the buyer fails to complete the transaction - may also be incorporated into this addendum. Extension of contract This is a document generated by the buyer or seller which extends the contract beyond the date originally agreed upon. Release of contract This document mutually releases the buyer and seller from all future obligations to buy or sell under the previously agreed contract. The release of contract usually includes instructions for: disbursing the deposit from escrow; who will bear the cost of any inspections, reports and liquidated damages; and releasing the balance of the deposit to the buyer. Buyer's Walk-Through Inspection This document should be generated prior to close of escrow, after the buyer has performed a visual inspection to verify the condition of the property and ensure that repairs agreed upon in the contract have been completed. This is a good opportunity for the seller to explain to the buyer the conditions of and repairs made to the property. Also check out The Walk-Through Contingency Form.

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