Does an addendum correcting the contract or replacing parties automatically extend dates in a contract?
No. The effective date of a FR/BAR contract is the last day the offer or counteroffer was signed, initialed, dated and delivered to the last party. When both parties sign an addendum, the effective date does not change unless its specifically stated in the addendum. Therefore, if an addendum is prepared to correct names, legal descriptions or any other items that were missed when the original contract was signed, you should always consider whether you want to extend any of the crucial time periods in the contract. If an extension is required, then the addendum should contain language extending that time period.
For example, suppose a contract was signed with an effective date of January 1st. Both agents realize the buyer’s name is misspelled and must be corrected per lender instructions. Both agents prepare an addendum correcting the name and the addendum is signed by all parties. This addendum does not automatically extend the effective date or any other time periods. The effective date is still the date the contract with the misspelled name was signed. If the buyer hasn’t done anything towards getting loan approval and would need more time, then the addendum should also extend the loan approval period or, more preferably, indicate the actual date the loan approval period will expire. That would effectively extend the date.
Takeaway- Always consider if any timelines need to be extended when preparing addendums.