Legal FHA VA Addendum

LEGAL FHA VA ADDENDUM

This FHA/VA Addendum (the Addendum) is entered into on by and between Buyer Name: and Seller Name: concerning the Property located at which is subject to a Purchase Agreement dated .

RECITALS

WHEREAS, Buyer seeks financing for the purchase of the Property through federally insured loan programs, specifically Federal Housing Administration (FHA) or Department of Veterans Affairs (VA) insured or guaranteed loans; and

WHEREAS, the parties intend to modify the Purchase Agreement to impose obligations and timelines that reflect the requirements and customary practices associated with FHA and VA underwriting, appraisal and repair conditions; and

WHEREAS, the parties desire to set forth their mutual understandings and remedies in the event of appraisal deficiency, loan denial, required repairs, VA entitlements or funding requirements.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. LOAN PROGRAM; LOAN APPLICATION

Buyer represents and warrants that Buyer has applied or will apply for financing under the following program(s) (select all that apply):

FHA    VA    Other:

2. LOAN COMMITMENT DEADLINE

Buyer shall use diligent good faith efforts to obtain a written loan commitment from a lender consistent with the terms of the Purchase Agreement no later than (Loan Commitment Deadline). If Buyer does not deliver a written loan commitment to Seller by the Loan Commitment Deadline, Seller may, after providing written notice and a five (5) business day opportunity to cure, elect to terminate the Purchase Agreement or pursue remedies for default as provided therein.

3. APPRAISAL; APPRAISAL DEFICIENCY

All appraisals required by Buyer’s lender shall be obtained at Buyer’s expense. If the appraisal establishes a value for the Property that is less than the agreed purchase price (Appraised Value), Buyer shall provide Seller with written notice within three (3) business days of receipt of the appraisal. Upon such notice, the parties shall have the following options (select one):

Renegotiate purchase price or terms; and the parties shall have days to agree in writing; or

Seller shall provide a credit at closing in the amount of up to toward Buyer’s closing costs; or

Buyer may terminate the Purchase Agreement and receive refund of any earnest money pursuant to the Agreement.

4. FHA / VA REQUIRED REPAIRS AND SAFETY ITEMS

If the lender’s appraisal or inspection identifies items that must be corrected for FHA or VA mortgage insurance or guarantee, Seller shall, at Seller’s expense, complete those required repairs prior to closing, unless the parties otherwise agree in writing. Seller’s obligation to complete required repairs is subject to a maximum aggregate cost to Seller of .

If repair costs exceed the specified cap, Seller may elect in writing to: (a) pay additional amounts; (b) provide an increased credit at closing; or (c) permit Buyer to terminate the Purchase Agreement and receive a refund of earnest money.

5. VA-SPECIFIC REQUIREMENTS

If Buyer is financing with a VA-guaranteed loan, Buyer shall deliver to Seller a Certificate of Eligibility (COE) and any other documentation necessary to confirm VA entitlement no later than . If Buyer fails to deliver such documentation within that period, Seller may treat the Purchase Agreement as terminated by Buyer, and earnest money shall be disbursed as provided in the Purchase Agreement.

6. ASSUMPTION; VA LOAN CONSIDERATIONS

If the Property is subject to an existing VA loan that is assumable, Buyer and Seller acknowledge that assumption may be subject to the lender’s approval. Buyer shall be solely responsible for obtaining lender approval for assumption and for all costs associated with the assumption process. Seller makes no representation that assumption will be permitted.

7. CLOSING COSTS; SELLER CONCESSIONS

Seller agrees to contribute up to toward Buyer’s allowable closing costs and prepaids. Contributions in excess of that amount must be agreed to in writing and shall not alter Buyer’s or Seller’s other obligations unless signed by both parties.

8. NOTICES

All notices required or permitted under this Addendum shall be in writing and shall be deemed delivered when personally delivered, sent by nationally recognized overnight courier, or transmitted via email with confirmed receipt to the addresses set forth above or as later designated in writing.

9. DEFAULT; REMEDIES

Except as expressly modified by this Addendum, the remedies for breach or default by a party shall be those set forth in the Purchase Agreement. In addition, where this Addendum grants a party a right to terminate due to failure of loan approval, appraisal or required repairs, such termination shall be effective upon written notice and the earnest money shall be disbursed in accordance with the Purchase Agreement.

10. REPRESENTATIONS AND WARRANTIES

Each party represents and warrants that: (a) it has full power and authority to enter into this Addendum; (b) the person signing below is duly authorized to bind such party; and (c) this Addendum constitutes a legal, valid and binding obligation enforceable against such party in accordance with its terms.

11. AMENDMENTS; WAIVER

No amendment, modification or waiver of any provision of this Addendum shall be valid unless in writing and signed by both parties. No waiver of any breach shall be deemed a waiver of any subsequent breach.

12. GOVERNING LAW

This Addendum shall be governed by and construed in accordance with the laws of the state in which the Property is located, without regard to principles of conflicts of law.

13. ENTIRE AGREEMENT; SEVERABILITY

This Addendum, together with the Purchase Agreement, contains the entire agreement of the parties with respect to the FHA/VA matters addressed herein and supersedes all prior and contemporaneous agreements, understandings and negotiations with respect to such matters. If any provision of this Addendum is held invalid or unenforceable, the remaining provisions shall remain in full force and effect.

14. COUNTERPARTS

This Addendum may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic facsimile or in portable document format (PDF) shall be binding.

15. ADDITIONAL TERMS

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