Amending the contract in Texas is made quite simple with the TREC Amendment form. From repair amendments to price changes or closing date changes, there are plenty of reasons why you might find yourself amending the contract. The Texas Real Estate Commission (TREC) Amendment form consists of 9 items that can be amended (one is a catch all for anything not covered in the first 8) and most are pretty straight forward, but we thought we’d take a moment to dissect the form in case you find yourself amending the contract on a residential home purchase. Remember, as a TREC promulgated form, this form is meant to be used by licensed real estate agent and attorneys even though they exist in the public domain. Always consult with your real estate agent or an attorney when amending the contract.
Amending The Contract – The Amendment Form
The Amendment to Contract starts off with a place to put the address and city of the property. As noted, there are 8 items that can be easily amended and 1 section that allows for “other modifications.”
Seller and Buyer amend the contract as follows: (check each applicable box)
(1) The Sales Price in Paragraph 3 of the contract is:
A. Cash portion of Sales Price payable by Buyer at closing ….. $ _____________
B. Sum of financing described in the contract ……………… $ _____________
C. Sales Price (Sum of A and B) ………………………….. $ _____________
The first line serves as the preamble and the instructions on how to use the form – each section has a checkbox and if that item is to be amended, you’ll need to check the box and fill out the information. Multiple items can be changed at the same time using the Amendment form.
If you need to change the agreed upon sales price of the home, this is where you would do it. You could also change downpayment and financing information. Section (1)C. should be the final sales price that you will pay for the home (total of downpayment and any financing).
(2) In addition to any repairs and treatments otherwise required by the contract, Seller, at Seller’s expense, shall complete the following repairs and treatments:
This is where items for a repair amendment would appear (although there is often not enough room, so you may see “See Attachment A” or similar language and a separate sheet attached). We cover repair amendments in depth in another post, but we recommend you always look to be precise with the language you use in this section. This is probably one of the most common ways of amending the contract as most buyers will use this to get some items taken care of during their option period.
(3) The date in Paragraph 9 of the contract is changed to _______________________ , ____.
Paragraph 9 in the 1-4 Family Residential Contract is all about closing, so this item refers to the closing date. Always remember to amend the closing date if you are going to push it out further as failure to close on the date specified in the contract can have legal consequences.
(4) The amount in Paragraph 12A(1)(b) of the contract is changed to $ ____________.
Paragraph 12.A.(1)(b) is used for seller concessions, or seller paid closing costs. This is an amount defined in the contract that the seller will pay towards the buyer’s closing costs. If this number needs to be renegotiated, it can be changed here.
(5) The cost of lender required repairs and treatment, as itemized on the attached list, will be paid as follows: $ ____________ by Seller; $ ____________ by Buyer.
If there are lender required repairs or treatments and the buyers and sellers need to define how they will be paid, this is the place to do so. The contract is clear in Paragraph 7.E. that there is no requirement for either party to pay these amounts and they must be agreed to in writing.
(6) Buyer has paid Seller an additional Option Fee of $ ________ for an extension of the unrestricted right to terminate the contract on or before 5:00 p.m. on _______________________ , ____. This additional Option Fee will will not be credited to the Sales Price.
If there is reason to extend the option period, this item will take care of that for you. Much like Paragraph 23. in the contract, you’ll need to define the amount of the option fee and whether it will or will not be credited to the sales price at closing. Unlike the contract, here you must define the date the option period will end as opposed to just naming how many days the option period will be.
(7) Buyer waives the unrestricted right to terminate the contract for which the Option Fee was paid.
Here the buyer can waive their option period, effectively removing their unrestricted right to terminate the contract (they may have other options for termination, this only cancels out the rights given to them by the option period). It is important to note that many people erroneously believe that while in the option period, if you sign off on a repair amendment, the option period ends. This is not the case. Unless the option period is waived, the buyer retains their full unrestricted right to terminate the contract until their option period expires.
(8) The date for Buyer to give written notice to Seller that Buyer cannot obtain Buyer Approval as set forth in the Third Party Financing Addendum is changed to _______________________ , ____.
The financing period as we often call it is the time it takes a buyer to receive approval from their lender on their home loan. If the buyer cannot obtain the approval, they must notify the seller in writing within the timeline set forth in the Third Party Financing Addendum or that timeline can be modified here to give the buyer some more time. Of course, any time the buyer asks for more time to get their loan approved, red flags will be raised on the seller’s side, so there will probably be some questions about this item if it is used.
(9) Other Modifications: (Insert only factual statements and business details applicable to this sale.)
The catch all of the amendment, this section is used to modify anything that you can’t change in the first eight items. The note about “factual statements and business details” is a reminder to agents to avoid the unauthorized practice of law. As we are not lawyers, we cannot modify anything that a lawyer would be needed to do. As an agent, you should always ask your broker about language you put in here to protect your clients and when in doubt, ask a lawyer to write the language in order to avoid crossing that line.
The final section of the form is an executed date and signature block for all parties to sign off on. Once the form has been signed and executed, it becomes part of the contract and modifies any of the information contained within. If you find yourself needing bigger changes or modifications to the contract, you’ll need to speak to an attorney and have them draw up any necessary documents.
image courtesy of Dean Hochman