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Addendum
An addendum is a separate document attached to a real estate or mortgage agreement, usually when it is first signed, that adds terms, conditions, or details not covered by the main contract. Once both parties sign it, the addendum becomes part of the agreement and is just as legally binding as the original.
Addendum Quick Facts
- An addendum adds new terms to a contract at the time it is signed
- It becomes part of the agreement and binds both parties once signed
- Common in agreements of purchase and sale and mortgage commitments
- An addendum adds to a contract, and an amendment changes an existing one
- Unsigned or undated addenda can create costly disputes later
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What Is an Addendum
An addendum is a document added to a contract to record terms that the main agreement does not already cover. In real estate, it usually attaches to the agreement of purchase and sale when the deal is first put together, and it can set out conditions, clarify details, or spell out obligations for the buyer or seller. Once everyone signs, the addendum carries the same legal weight as the contract to which it is attached.
People often mix up an addendum with an amendment, but the timing and purpose differ. An addendum adds something to an agreement, usually at signing, while an amendment changes a term in an existing agreement. If you and the seller agree on a repair after the contract is signed, that change is handled by an amendment. A financing or inspection condition written in when the offer is drawn up is an addendum.
In a home purchase, addenda often appear as numbered schedules to the offer. They include clauses that go beyond the standard form, such as a financing condition, a home inspection condition, or a list of fixtures and chattels included in the sale. Reading each addendum carefully matters because anything written there becomes a term you are bound to once you sign.
Why an Addendum Matters for Mortgages
For you, as a buyer, an addendum is where the conditions that protect your financing are usually found. When you make an offer, you and your agent decide which conditions to include, and making an offer on a house almost always means adding a financing condition so you are not committed before your mortgage is approved.
On the lender side, the addendum can shape whether a deal closes at all. A financing condition gives you room to confirm your mortgage, and a condition that is missing or poorly worded can leave you bound to buy even if financing falls through. CMHC’s offer guidance stresses naming the “conditions that go with the offer, including property inspection and approval of mortgage financing,” which is exactly what an addendum records. Your lawyer reviews these terms before closing, since the signed addenda define the deal.
Common Types of Addenda
Financing Condition: An addendum or clause that makes the purchase conditional on your mortgage being approved. If your financing does not come through by the deadline, you can usually withdraw and recover your deposit, which is why this is one of the most important terms a buyer can add.
Inspection Condition: An addendum that lets you have the home inspected and then proceed, renegotiate, or back out if the report turns up serious problems. It sets a deadline and the steps each side must follow.
Schedule of Inclusions: A list attached to the agreement of the fixtures and chattels that stay with the home, such as appliances, window coverings, or an owned hot water tank. Writing it down prevents disputes about what is included on closing day.
Here is how it plays out. A buyer offers $600,000 and adds a financing condition, giving 10 days to secure a mortgage. The appraisal comes in low, and the mortgage is declined. With that condition in the addendum, the buyer recovers the deposit instead of being forced to complete the purchase.
Common Mistakes and Misunderstandings About Addenda
- Treating an addendum as informal when it is fully binding once signed
- Confusing an addendum, which adds terms, with an amendment, which changes them
- Leaving an addendum unsigned or undated weakens it in a dispute
- Assuming a verbal side agreement carries the same weight as a written addendum
- Skipping a financing condition and risking your deposit if the mortgage falls through
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Frequently Asked Questions (FAQ) About an Addendum
What is the difference between an addendum and an amendment?
An addendum adds new terms to a contract, usually at the time it is signed, while an amendment changes a term in an existing agreement. In a home purchase, financing or inspection conditions are typically added through an addendum or schedule, and any agreed-upon changes are handled after an amendment is signed. Both become binding once all parties sign.
Is an addendum legally binding in Canada?
Yes. Once both parties sign and date an addendum, it becomes part of the contract and is enforceable in the same way as the main agreement. An unsigned or undated addendum is much harder to rely on if a dispute arises.
What is usually included in a real estate addendum?
A real estate addendum holds the terms that go beyond the standard contract, most often a financing condition, a home inspection condition, and a list of the fixtures and chattels included in the sale. It can also set deadlines and spell out what each party must do.
Can you add an addendum after the contract is signed?
Once a contract is signed, a change is typically made by an amendment rather than by an addendum, and it takes effect only if both parties agree in writing. Adding or altering terms after signing is never automatic; the other side must accept the change. Your lawyer or agent can prepare the right document for the situation.