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What Are Repair Addendums? [VIDEO]

Posted by Twin Cities Habitat for Humanity on 11:30 AM on January 21, 2020

repair addendumIf you’re a first-time homebuyer, you’re likely trying to navigate the twists and turns of buying a house with the help of your real estate agent, lender, friends, and family. But it can be difficult to remember every buzzword and document that comes across your desk.

In our video featuring Community Loan Officer Jen LaCroix, we take a look at repair addendums, including:

  1. What is a repair addendum? [0:19]
  2. How does an addendum work? [2:19]
  3. Repair addendums are not a wish list [4:05]

Check out the full video:

What is a Repair Addendum?

An addendum is an additional clause to the purchase agreement after it has been written and accepted. There are several types of addendums. They can originate from something you forgot to request  when making your offer or they could be a “repair addendum,” which is added after a home inspection is completed.

Read our blog to find nine Home Inspection Deal Breakers.

Most buyers make their offer “contingent on an inspection.” That means you want a professional to evaluate the condition of the home and make sure things are in working order and not in need of immediate repair before you purchase the home. Repair addendums are any repairs that need to happen based on the home inspector’s report.

How Does an Addendum Work?

When you’ve submitted your repair addendum, it will appear clearly on the top of the purchase agreement and notes what needs to be fixed and who will fix it. Here are a few things to remember about repair addendums:

  • Lenders Care About Repair Addendums. “It’s important to me as a lender to ensure as part of the financing that those addendums get taken care of,” says Jen. So, oftentimes lenders require that three business days before closing, an additional addendum has been added stating all repairs have been addressed.
  • Contractors Can Affect the Purchase of a Home. “I want to make sure that this house I’m about to give you money for is owned free and clear,” says Jen. But if your repair addendums require a professional contractor to complete the work and they’re not paid by the date of closing, that can impact a lender's decision to move forward with a loan for the home, or cause a lien to be placed on the house.
  • Repair Addendums Must Be Followed to the Letter. If the repair addendum requires that a licensed contractor performs the work, that’s what needs to happen. Otherwise, you’re in jeopardy of being in breach of contract!

Repair Addendums are Not a Wish List

“I actually saw a repair addendum come across my desk that requested to have a hinge on a door fixed,” says Jen. That’s not an example of a useful repair addendum. Instead, focus on repairs that would otherwise keep you from purchasing the home.

Chris Coleman Year End blog_1600x900

It may be more work to include small fixes like a door hinge in a repair addendum than it would to just fix it yourself. Remember, if you add a repair addendum to the purchase agreement, your lender will ask for the following documents at the closing:

  • An additional addendum stating the work has been done
  • Paid invoices and receipts for that addendum
  • A lien waiver (If a licensed contractor is involved)

That’s a lot of paperwork for a hinge that might otherwise cost $10 to fix!

Addendums are important aspects of the homebuying process and they can save you a lot of time and money down the line. Just make sure you’re using them wisely.

If you liked this video and want some more first-time homebuyer tips, subscribe to our YouTube channel! 

first time homebuyer guide

Tags: Homebuyer Tips, Homeownership Program, 2020

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