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Are you using the third-party financing addendum correctly?

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12/18/2014 | Author: Editorial Staff

If box 4A(2)(b) is checked on TREC contracts, do I need to use the Third Party Financing Addendum for Credit Approval?

No. Since checking this box indicates that the buyer is not making his contract contingent upon his personal-financing approval, it would be inappropriate to attach the Third Party Financing Addendum for Credit Approval (TAR 1901, TREC 40-6), which describes that contingency.

If the buyer wants to make the contract contingent on loan financing, he must check the box in 4A(2)(a) and attach the Third Party Financing Addendum for Credit Approval to the contract when making the initial offer. By checking the box in 4A(2)(b), the buyer will not have the protection that the Third Party Financing Addendum for Credit Approval offers in terms of terminating the contract if he is unable to get approved for the loan.

Note there is no reference to attaching the addendum in the language of paragraph 4A(2)(b) like there is in paragraph 4A(2)(a). It was drafted this way to clarify that no addendum should be attached when paragraph 4A(2)(b) is checked.

Read more legal questions and answers on texasrealestate.com.

Categories: Legal
Tags: legal faq, third party financing addendum

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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.

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