The Amendment Can be a Very Risky Document to Use

Jim Amendments III (@jimamendments) / Twitter

Consider the situation where the Buyer includes a Home Inspection Condition and a Financing Condition. The deal is struck on Monday. Both conditions are due by 8:00 pm on Thursday.

On Tuesday, the bank approves the mortgage financing, and on Wednesday the Home Inspection is completed.

Fred the Buyer’s Agent waits until he receives a copy of the Home Inspection Report on Thursday morning. There are still hours to go before the deadline.

Unilateral Documents

Fred could use either a Waiver or Notice of Fulfillment for either or both of the conditions. It only needs to be signed by Bob, the Buyer. As long as it’s over to the other side by the 8:00 pm deadline, then, the deal is going forward.


This is a document which requires both parties to sign. Fred can draft it up, have Bob sign it and send it over for the Seller’s signature, BUT he has “lost control” of the process. The Seller could simply let the deadline pass, and then the deal fails.

That’s the essential problem.

A Seller will simply allow the time period to expire, if they have changed their mind, and the deal is off.

Seller’s Remorse

This is the problem with Amendments. Perhaps, subsequent to the sale:

  • The Seller regrets having sold,
  • Thinks that the closing date is far too soon,
  • Believes that the sale price was too low,
  • Has another Buyer surface with more money.

In any one of those situations, the Seller is hoping that the Buyer will either not get financing or will not be satisfied with the inspection. In either case, the Buyer will not wish to proceed.

The other issue, is a mistake in the contract process by the Buyer’s Agent.  In the case, under discussion, the Waiver or the Notice of Fulfillment should have been used.

Using the Amendment was an outright mistake!

Amendment – Proper Use

Let’s assume, Fred wishes to add another Buyer to strengthen the financing or adjust the purchase somewhat to reflect a deficiency on the inspection report.

So, the Amendment is prepared:

  1. Adding Buyer #2,
  2. Reducing the price.

That’s fine, that’s what the Amendment is for, making serious changes which call for the agreement of both parties.

Amendment – Ancillary Use

While Fred has those two changes “in play”, as a matter of convenience, he might also simply delete the Financing and Home Inspection Conditions.  That’s justifiable, as long as the Seller remains cooperative.

Amendment – Negligent Process

The Buyer wants to proceed but Fred uses simply the Amendment deleting the Conditions, adding Buyer #2 and adjusting the price. The Seller simply allows this proposal to expire and the deal fails.

Waiver/Notice of Fulfillment and Amendment – Proper Process

Let’s assume the Buyer wants to proceed with the deal “no matter what”, even without the price reduction.

In this case, the proper procedure would be to:

  1. Use either the Waiver or Notice of Fulfillment to confirm that the transaction will be proceeding, prior to the 8:00 pm deadline on Thursday, and
  2. Use the Amendment which could be signed effectively at any time to add the additional Buyer and adjust the price.

Amendment – Strategic Negotiating Process

In this case, assume that there is a substantial problem and the Buyer is seeking a $25,000 reduction in the purchase price. If it’s not granted, then the Buyer wishes to “walk away”.

In this case, Fred can put everything in one document, the Amendment, and submit it to the Listing Agent prior to the deadline, basically on a “take it or leave it” basis.

This tactic can work. If accepted by the Seller, the deal is going forward.

Amendment – Generally

As you see, the Amendment can sometimes be helpful and sometimes get you in trouble. So, be careful.

Brian Madigan LL.B., Broker

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