Realtor® Legal Tip – What’s your answer to this common situation?
November 20, 2017
Author: Curtis Bullock
Suppose the following: Elaine Buyer submits an offer to Jerry Seller.
Addendum #1 includes the following:
1) Seller to pay $3500 of Buyer’s closing costs.
2) Kitchen subzero refrigerator and basement flat screen TV to be included.
Jerry Seller counters with Addendum #2:
1) Seller to pay $2500 of Buyer’s closing costs.
2) Earnest Money to be increased to $5000.
Elaine Buyer counters with Addendum #3:
1) F&A Deadline to be moved to November 20th.
Jerry Seller properly accepts Addendum #3.
What terms are included in the contract?
A: Everything except Addendum #1 requirement number 1 since that was the only thing specifically countered.
When negotiating contracts that include multiple addenda like this, is there a good way to ensure both buyer and seller know exactly what they have agreed to so there isn’t a problem later on?
A: I’ve seen attorneys argue quite effectively that the safer approach is to reiterate terms from a prior addendum in a later addendum just to clarify that those terms are in fact accepted (or not). So, in the example above, in Addendum 3, Elaine could have written a simple statement that said something like “EM to be $2500, fridge and TV included, and F&A Deadline to be 11/20.” In other words, restating all terms that have been agreed to. This risk reduction tip can be even more effective when several addenda with multiple terms on each have gone back and forth between the buyer and seller. So even though it might be redundant, it’s a good idea to eliminate the potential confusion and possibility of the buyer and seller not reaching a “meeting of the minds.”