In the context of real estate, what is an addendum?

An addendum is best understood as a modification to an existing contract. In real estate transactions, it serves to provide additional terms, conditions, or provisions that either clarify or alter the original agreement without replacing it entirely. This is particularly useful when parties involved need to adjust certain aspects of the contract after it has been signed, such as updating the timeline for closing, adjusting financial terms, or including contingencies based on inspections or financing.

By using an addendum, all parties can agree to the new terms while maintaining the overall integrity of the initial contract. This helps ensure that any changes are clearly outlined and legally documented, preventing misunderstandings later on in the transaction process. An addendum must be agreed upon and signed by all parties involved to be enforceable.

Other options such as a separate legal contract or a termination notice do not accurately describe the nature of an addendum, as they refer to different legal documents or actions entirely. Similarly, a summary of a property would not be an appropriate definition either, as a summary does not modify or speak to the terms of the contract itself.