EstatePass
ContractsEASYFREE

Johnny purchases a house, doesn't want furniture left behind. He signs Tuesday, changes mind Thursday, calls agent to add furniture to contract. What is this?

2:40
0 views

Question & Answer

Review the question and all answer choices

A

An option

An option is a separate contract that gives one party the right β€” but not the obligation β€” to purchase property within a specified time period for a set price; it has nothing to do with adding terms about personal property like furniture to an existing purchase agreement.

B

A novation

A novation is the substitution of a new contract, party, or obligation for an existing one, effectively extinguishing the original agreement; adding a furniture clause to an existing contract does not extinguish or replace the original contract, so novation is clearly inapplicable here.

C

An addendum

Correct Answer
D

An amendment

An amendment modifies or changes terms that already exist within an executed contract β€” for example, changing the closing date or purchase price β€” whereas Johnny is adding an entirely new term (furniture inclusion) that was never part of the original agreement, making addendum the more precise legal instrument.

Why is this correct?

The correct answer is an addendum because Johnny is adding a new term β€” the inclusion of furniture β€” to the purchase contract after signing but before the transaction closes, which is the classic use case for a CAR Addendum to Purchase Agreement (form APAA). An addendum adds new provisions or terms that were not originally part of the contract, distinguishing it from an amendment, which modifies or changes terms that already exist in the contract. Since the original contract contained no furniture clause, this is an addition of new content, making 'addendum' the precise and correct classification.

Ready to Ace Your Real Estate Exam?

Access 2,000+ free video lessons covering all 11 exam topics.