What Do I Do With a Builder’s “Addendum to the Contract” Form?

Question

My Buyer wants to purchase a new construction home. We submitted an Offer to the Builder using the standard Louisiana Residential Purchase Agreement form.  The Builder responded by providing an additional document entitled “Builder’s Addendum to Purchase Agreement.”

What do I do with this?

Answer

It is common for many Builders in Acadiana to use a “Builder’s Addendum to Purchase Agreement” (or a similar “Counter-Offer” form).

If the Builder’s “Addendum” does not have any conflicting terms and/or conditions with the standard Purchase Agreement your Buyer submitted, then Buyer and Builder are bound to both the Purchase Agreement submitted by your Buyer and the “Addendum” submitted by the Builder.

However, in most instances, the Builder’s “Addendum” contains terms and/or conditions that conflict with the standard Purchase Agreement form.

For example:

  1. The Standard Purchase Agreement form indicates that the Deposit is refundable under certain circumstances, while most Builder’s “Addendums” that I’ve reviewed indicate the Deposit is not refundable for any reason.
  2. Also, the Standard Purchase Agreement indicates that HOA dues are prorated between the parties as of the date of Closing, while most Builder’s “Addendums” that I’ve reviewed indicate the Buyer is responsible for HOA dues.

 

(These are just two examples that stand out at the time of this writing.  I’m sure there are more examples of conflicting terms and/or conditions that exist.)

If the Builder’s “Addendum” has conflicting terms and/or conditions with the Purchase Agreement submitted by your Buyer, it could be a problem determining which terms and conditions ultimately control. Unfortunately, the Answer to which terms and conditions control is often times only determined after the Builder and Buyer submit the matter to Arbitration or Court Proceedings.  Trust me: you don’t want to go through either of these!

For this reason, it might be a good idea to submit the underlying Purchase Agreement and the Builder’s “Addendum” to the Buyer’s Attorney for review and recommendation.

At Tuten Title & Escrow, LLC, on a regular basis we review both the underlying Purchase Agreement and the Builder’s Addendum four our clients and provide recommendations, accordingly.