Half-A**ed Addendums

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Want to ruin a perfectly good contract? Write your own addendum.

Contracts used by Realtors® in Florida are over 10 pages long and have over 25 various fully worded addendums and riders that provide plenty of ways to modify the standard agreement to suit the individual needs of the buyers and sellers. There really isn’t any need to have to write a unique addendum or additional term. But agents do! And quite frankly they often do it badly.

Embedded in the dozen or so pages of the standard contract forms is language that says something to the effect that handwritten or attached terms will override pre-printed language. So a badly worded addendum or additional term can truly muck up a transaction.

Here’s an example. A Buyer submits an offer to a Seller on a contract that provides an inspection of the property and a dollar limit the seller may have to pay for qualified repairs. The Seller doesn’t want to make any repairs. So the Seller’s agent writes on the agreement “Property is being sold As-Is”.

If the Buyer agrees to this without any changes, and signs off on this handwritten provision, they may have signed away their right to inspect and their right to cancel (clarification, I am NOT an attorney — seek the advice of one if you need to). What everyone THINKS they did was make this contract an “As-Is” contract which contains the right to inspect and cancel. This handwritten notification “Property is being sold As-Is” says the Buyer is buying it. Period.

There are two proper ways to address this counteroffer: 1) Change the repair limits to $0 or 2) Use an addendum that is pre-printed and changes the standard agreement to an As-Is Agreement. Both forms of our readily available contracts have such a pre-printed addendum.

Another common handwritten term relates to Homeowner’s Association Documents. Sometimes a Buyer wants to review restrictions, budgets, rules and regulations etc., and have an option to cancel if the community isn’t suitable. There is no form for this one! So an agent will write something like “Seller shall provide copies of Association Rules and Regulations”. Once the Seller has provided these documents, they have effectively satisfied the condition. There is no time to review, requirements of notice, deadline to deliver the notice, or what options the Buyer has. All the Seller had to do was deliver the documents. Done!

The big takeaway here is don’t write your own terms, riders, or addendums unless you are really really good at it. Doing it badly can harm your customers and expose you to a lot of liability. If you must, run it by your manager, your closing agent, or your closest real estate attorney friend.