Addendum vs. Amendment
Amendment is a term that has become very common in our daily lives, as we often hear about constitutional amendments, amendments made in textbooks, and even policies of an organization. Amendment pertains to improvement in a text, a document, legislation, or a policy by introducing changes. There is another word, addendum, that confuses many when they see it being used. Although there are many similarities between amendment and addendum, there are subtle differences that necessitate their correct usage, as they cannot be used interchangeably. This article attempts to highlight these differences between the two similar meaning words that are used very often in the real estate business.
An addendum is a text added to the original text because it got omitted from the draft by mistake or on purpose. Addendums are commonly seen in the case of textbooks where authors issue these texts that get added in subsequent revisions or reprints. In the case of a real estate contract, an addendum is a point or a rule that was not part of the original document but was added at the insistence of the buyer. For example, if the buyer is satisfied with the property and price but wants to open an office inside, he can get this point added to the agreement, making the contract subject to clarification of the doubt that he is allowed to use the premises for commercial purposes. If there is a neighbor making a fencing that can be treated as encroachment in the property, the buyer can get another point added to the effect of getting the property free from encroachments before agreeing to the contract. Thus, it can be termed as an explanation or information about the issues raised by the buyer or seller before signing the contract. An addendum is always a part of the contract.
Amendment is a correction of an error in a document pointed out by the buyer or seller in the case of a real estate contract. An amendment may be because of a legal provision or it may be because of a factual error in the document. Typing errors are also corrected by introducing amendments in documents.
Amendments are commonly seen in communication and in the corporate world, where changes can be made in a document any number of times. An amendment to a real estate contract is acceptable only when it is signed by parties that are part of the original contract.
Key Takeaways
- Changes made to the original contract are referred to as amendments, while additions to the original document are called addendums.
- If something was omitted by mistake and added later on, it is mentioned as an addendum.
- Addendums are treated as part of the contract in real estate transactions, whereas amendments are a part of the contract only until it is signed.
