Are you using the third-party financing addendum correctly?
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.
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