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Form Rev. 6/06
NWMLS Form No. 22A
FINANCING ADDENDUM TO PURCHASE AND SALE AGREEMENT
GENERAL COMMENTS:
A. Use. This Addendum is to be attached to a Purchase and Sale Agreement when the sale is
conditioned on the Buyer obtaining financing. Attach a copy to every copy of the Purchase
and Sale Agreement. If there is Seller financing, use Form 22C, Payment Terms Addendum.
B. Appraisal. The provisions on appraisal are part of the financing contingency. In other
words, if the Buyer waives the financing contingency, the Buyer also waives the provisions
on appraisal.
ASSISTANCE FILLING IN THE BLANKS: The following numbers refer to the numbers on
the sample form shown in this Manual.
1. Date of Purchase and Sale Agreement. Insert the same date that is at the top of the first
page of the Purchase and Sale Agreement.
2. Buyer. Insert the Buyer’s name(s) as on the Purchase and Sale Agreement.
3. Seller. Insert the Seller’s name(s) as on the Purchase and Sale Agreement.
4. Property. Insert the Property address as on the Purchase and Sale Agreement.
5. Financing. Select the type of financing for which Buyer will make application.
6. Down Payment. Insert the amount of the down payment. Put a dollar amount (e.g.
“$20,000.00”) or a percentage of the Purchase Price (e.g. “up to 20% of the Purchase Price”
or “at least 20% of the Purchase Price”). Do not enter “minimum down,” because with some
Buyers and with some types of financing, the minimum down may be more than Buyer can
afford. In that case, Buyer will lose the Earnest Money for failure to have sufficient funds to
close (see paragraph 5 of Form 22A). Remember that the down payment is money produced
by the Buyer “in addition to the Loans,” and it is not appropriate to include in the down
payment monies that are the result of contingent sources of financing.
7. Loan Application Deadline. Insert the number of days the Buyer has to make application
for the loan. Note that the form provides two options, identified in the example as 7a and 7b.
Under the first option (7a), the Buyer will be required to apply for financing within 5 days of
mutual acceptance of the Purchase and Sale Agreement (or as otherwise agreed). Under the
second option (7b), contingent Buyers will be allowed to delay applying for a loan until 5
days after satisfying the sale-of-home contingency (or as otherwise agreed). The second
option allows contingent Buyers to avoid paying loan application costs until they know if
they are able to sell their house. If you fail to check either box, the financing contingency and
deadline for application will run automatically from mutual acceptance.
8. Waiver of Financing Contingency Deadline. Insert the number of days the Buyer has to
waive the financing contingency or provide a letter of loan commitment. Note that the
Purchase and Sale Agreement does not terminate automatically if the Buyer fails to provide
the letter of loan commitment. Instead, if Buyer fails to provide a letter of loan commitment,
Seller may give notice to the Buyer that the Agreement will terminate if the Buyer does not
waive the financing condition within three (3) days.
If Buyer provides the letter of loan commitment, Seller may review it and decide if Seller
will continue with the transaction (in which event Seller does nothing) or give notice of
termination. If Seller decides to give notice of termination, Seller must give Buyer an
opportunity to waive the financing condition and stop the automatic termination.
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Man. Rev. 6/06
Form Rev. 6/06
NWMLS Form No. 22A
FINANCING ADDENDUM TO PURCHASE AND SALE AGREEMENT
If Seller does not terminate, Seller may request updated letters of loan commitment no more
frequently than every five (5) days after the last letter was due. Remember, this form is
designed to allow communication between the parties about the status of Buyer’s
financing so that Seller is not forced to make the decision to terminate in a vacuum.
Note: The form does not state that the Buyer must give notice that the Buyer has obtained
“loan approval,” rather, the Buyer must waive the contingency, particularly if the Buyer
wants to move forward to closing and the Seller has given notice of termination. There is
always risk to the Buyer who waives the financing contingency, but it may be the only way
to prevent the Seller from terminating the Agreement. If the Buyer waives financing and for
any reason her or she cannot obtain financing (for example, if the Buyer cannot satisfy the
conditions of loan approval or some other glitch arises), then the Buyer still will be obligated
to proceed with the purchase and could forfeit the earnest money or be liable for specific
performance or damages if he or she does not close. As a practical matter, this means that if a
Seller sends the three day notice of termination, it is likely that a conservative Buyer will not
waive the contingency and the transaction will indeed terminate. Therefore, Sellers should
carefully consider whether to send a three day notice under paragraph 3, because they may
end up losing an otherwise qualified Buyer who simply is too cautious to waive the
contingency. On the other hand, if the Seller does not give notice of termination, the
financing contingency will remain in effect, perhaps all the way through Closing. In order
to remove the financing contingency, the Seller must take affirmative action by giving
the notice of termination, thereby causing the Buyer to either waive the financing
contingency or terminating the Agreement altogether.
9. FHA Loan Costs. Enter the amount the Seller agrees to pay toward the Buyer’s FHA loan
discount. Fill in either the percent or the dollar amount. If you do not fill in a percent or an
amount, the Seller will automatically be obligated to pay $300.00 of the Buyer’s loan costs.
If you put in a percent, state that it is a percent of the loan (e.g. “3% of the loan amount”). If
the Seller will not pay anything fill in “0” or “zero” in the blank.
If you are the agent of the Seller, you should explain this clause to the Seller. The Seller
should understand that if they insert “zero,” Buyer may not be able to obtain financing.
Any amount that the Seller pays toward the Buyer’s loan costs will be applied first to loan
and settlement costs and then any balance will be applied to the loan discount.
10. VA Loan Costs. If the Buyer intends to obtain a VA loan instead of an FHA loan, fill in this
blank. See the Instructions at Item 9. Note that the Seller agrees to pay the full escrow fee in
a VA loan, as required by the VA loan program. In addition, the Seller may also contribute
toward the Buyer’s loan costs.
11. Conventional Loan Costs. If the Buyer intends to obtain a conventional loan, the parties
may agree to share the loan and settlement costs. Insert either the dollar amount or a
percentage. If you do not fill in the blank, the Seller is obligated to pay nothing. Unlike the
VA and FHA Loan Costs provisions, any balance remaining after payment of loan and
settlement costs and the other items described is returned to the Seller.
12. Importance of Home Inspection Notice for FHA Loans. If this is an FHA loan, attach
Form 22F (Rev. 1/97 or later).
13. Inclusion. Check the box to indicate if the Homeowners Insurance Contingency is included
in the purchase and sale agreement or not. If you fail to check a box, the Homeowners
Insurance Contingency is automatically included.
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Man. Rev. 6/06
Form Rev. 6/06
NWMLS Form No. 22A
FINANCING ADDENDUM TO PURCHASE AND SALE AGREEMENT
14. Insurance Contingency. Insert the number of days that Buyer will have to make application
for homeowner’s or property insurance. If the Buyer fails to make application within the
designated period of time, the insurance contingency will be deemed satisfied or waived
automatically and Buyer must move forward with the purchase and sale regardless of
Buyer’s ability to obtain complying homeowner’s or property insurance.
15. Insurance Deadline. Insert the number of days that Buyer will have to give notice of
Buyer’s inability to obtain a standard policy of homeowner’s or property insurance with a
premium that does not exceed the cap set forth in paragraph 10. Again, if Buyer fails to give
notice, the insurance contingency will be deemed satisfied or waived automatically and
Buyer must move forward with the purchase and sale regardless of Buyer’s ability to obtain
homeowner’s or property insurance.
16. Initials and Date. Buyer(s) and Seller(s) should initial and date this Addendum. Insert the
date each person initialed, not the date on the Purchase and Sale Agreement.
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Man. Rev. 6/06
NWMLS Form 22A
Financing Addendum
Rev. 6/06
Page 1 of 2
©Copyright 2006
Northwest Multiple Listing Service
ALL RIGHTS RESERVED
FINANCING ADDENDUM
PURCHASE & SALE AGREEMENT
1
The following is part of the Purchase and Sale Agreement dated
, 200
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between
3
and
4
concerning
1
("Buyer")
2
("Seller")
3
("the Property")
4
1. DOWN PAYMENT/LOAN APPLICATION. This Agreement is contingent on Buyer obtaining a
Conventional First 5
Bridge
VA
FHA loan or loans to purchase the Property (the "Loans"). Buyer
5 Conventional Second
agrees to pay
down, in addition to the Loans and to
6
7a days
within
make written application and pay the application fee, if required, for the subject Property
if this Agreement is conditioned on the sale of
(5 days if not filled in) after mutual acceptance of this Agreement, or
Buyer's Property, within
7b days (5 days if not filled in) after Buyer satisfies that contingency ("Satisfaction")
(from mutual acceptance if neither box checked), for the Loans to pay the balance of the purchase price. If Buyer
fails to make application for financing within the agreed time, then the financing contingency contained herein shall be
deemed waived.
2.
3.
4.
5.
6.
7.
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FINANCING TIMELINES/LETTER OF LOAN COMMITMENT. Unless Buyer has given notice waiving this financing
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days (30 days if not filled in) after (a) mutual acceptance of the Agreement or
contingency, no later than
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(b) Satisfaction, if selected above, Buyer shall provide to Seller a letter of loan commitment from Buyer's lender which
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states the date of loan application, the current status of Buyer's loan application, and any conditions that remain for loan 17
approval. A letter from the lender generated or dated at or prior to mutual acceptance shall not constitute a letter of loan 18
commitment which complies with this paragraph. NWMLS Form 22AR should be used to provide notice of waiver or to
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transmit the letter of loan commitment. For purposes of this Addendum, "lender" means the party funding the loan.
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REVIEW OF LETTER OF LOAN COMMITMENT/TERMINATION. Seller may give notice of Seller's election to terminate 21
this Agreement at any time after the letter of loan commitment is due or received, whichever occurs first. If, within 3
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days after Seller's notice, Buyer does not waive this financing contingency by notice, this Agreement shall terminate
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and the Earnest Money shall be refunded to Buyer. NWMLS Form 22AR should be used for the parties' notices.
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UPDATED LETTERS OF LOAN COMMITMENT. Without suspending Seller's right to give notice of termination,
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Seller may request updated letters of loan commitment every 5 days after the date the previous letter of loan
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commitment was due.
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EARNEST MONEY. If Buyer has not waived this financing contingency, and is unable to obtain financing after a good 28
faith effort then, on Buyer's notice, this Agreement shall terminate and the Earnest Money shall be refunded to Buyer
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after Buyer delivers to Seller written confirmation from Buyer's lender confirming the date Buyer's loan application for
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the subject property was made, that Buyer possessed sufficient funds to close and the reasons Buyer's application was 31
denied. If Seller terminates this Agreement, the Earnest Money shall be refunded without need for such confirmation
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from Buyer's lender.
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INSPECTION. Seller agrees to permit inspections required by Buyer's lender, including but not limited to structural,
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pest, heating, plumbing, roof, electrical, septic, and well inspections. Seller is not obligated to pay for such inspections 35
except as otherwise agreed.
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APPRAISAL LESS THAN SALE PRICE. If Buyer’s lender’s appraisal of the value of the Property is less than the
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Purchase Price, Buyer may, within 3 days after receipt of a copy of lender’s appraisal, give notice of Buyer’s election
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to terminate this Agreement unless Seller, within 10 days after receipt of such notice, delivers to Buyer either:
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(a) (i) If this Agreement is contingent on FHA financing, a reappraisal by the same appraiser, at Seller's expense, in
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an amount not less than the Purchase Price or (ii) if this Agreement is contingent on non-FHA financing,
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reappraisal, at Seller's expense, by the same appraiser or another appraiser acceptable to the lending institution in 42
an amount not less than the Purchase Price; or
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(b) Written consent to reduce the selling price to an amount not more than the amount specified in the appraisal or
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reappraisal, whichever is higher. (Not applicable if this Agreement is conditioned on FHA financing. FHA does not 45
permit the Buyer to be obligated to buy if the Seller reduces the Purchase Price to the appraisal value. The Buyer, 46
however, has the option to buy at the reduced price.)
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If such reappraisal or consent to reduction of Purchase Price is not so delivered, this Agreement shall terminate and the 48
Earnest Money shall be refunded to Buyer. To permit the parties the foregoing times for notices, the Closing Date shall 49
be extended accordingly. Buyer's waiver of this financing contingency constitutes waiver of this paragraph 7.
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Initials: BUYER:
BUYER:
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DATE:
SELLER:
DATE:
SELLER:
16
DATE:
DATE:
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NWMLS Form 22A
Financing Addendum
Rev. 6/06
Page 2 of 2
©Copyright 2006
Northwest Multiple Listing Service
ALL RIGHTS RESERVED
FINANCING ADDENDUM
PURCHASE & SALE AGREEMENT
(continued)
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8. SPECIAL LOAN COST PROVISIONS.
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FHA LOAN COSTS. If this sale is contingent on Buyer obtaining an FHA loan, Seller agrees to pay
($300.00 if not filled in), which shall be applied to that portion of Buyer's loan
9
and settlement costs that the Lender is prohibited from collecting from the Buyer under FHA regulations. Any balance
remaining shall be payable to Buyer's loan discount at the interest rate selected by Buyer or to other settlement costs as
allowed by FHA regulations.
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CONVENTIONAL LOAN COSTS. Seller agrees to pay up to
($0.00 if 65
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not filled in), which shall be applied to Buyer's loan and settlement costs, prepaids, loan discount, loan fee, interest buy 66
down or financing and closing costs.
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VA LOAN COSTS. If this sale is contingent on Buyer obtaining a VA loan, Seller agrees to pay the full escrow fee for
the entire transaction. In addition Seller agrees to pay
10
($300.00 if not filled in), which shall be applied to that portion of Buyer's loan and settlement costs that the Lender is
prohibited from collecting from the Buyer under VA regulations. Any balance remaining shall be payable to Buyer's
loan discount, loan fee, interest buy down and/or financing and closing costs to the extent permitted by VA regulations
and Buyer's loan amount is not thereby reduced.
9. FHA/VA - APPRAISAL CERTIFICATE. If this Agreement is contingent on Buyer obtaining FHA or VA financing, it is
expressly agreed that notwithstanding any other provisions of this Agreement, Buyer shall not be obligated to complete
the purchase of the Property unless Buyer has been given in accordance with HUD/FHA or VA requirements a written
statement by FHA, VA, or a Direct Endorsement lender, setting forth the appraised value of the Property (excluding
closing costs). Buyer shall pay the costs of any appraisal. If the appraised value of the Property is less than the
Purchase Price, paragraph 7 above shall apply. If Seller does not reduce the Purchase Price to the appraised or
reappraised value, or deliver a reappraisal at or exceeding the sale price, the Buyer shall have the privilege and option
of proceeding with the consummation of this Agreement without regard to the appraised value, provided the difference
in excess of the appraised value is paid in cash.
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PURPOSE OF APPRAISAL. The appraised valuation is arrived at only to determine the maximum mortgage FHA or VA
will insure. Neither FHA nor VA warrant the value or the condition of the Property. Buyer should satisfy himself/ herself
that the price and condition of the Property are acceptable.
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"Importance of Home Inspections" NOTICE FOR FHA LOANS. FHA requires the Buyer to sign a FHA “Importance
of Home Inspections” Notice (NWMLS Form 22F, Rev. date 1/97 or later) on or before the date Buyer executes any
purchase and sale agreement. This requirement does not apply to new construction.
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10. NOTICE TO BUYER CONCERNING INSURANCE. The availability and cost of homeowners or property insurance on
the Property depends on a number of factors, including your personal insurance, financial and credit history, materials
and conditions present in or on the Property, and the claims history for the Property. Some insurance companies base
part of their underwriting decision on loss history reports that show the history of insurance claims or property losses
concerning the Property or made by you concerning other properties. At the time you apply for homeowners
insurance, most insurance companies will only issue a binder to you. A binder is not an insurance policy and it is not a
promise that a policy will issue. It is only a temporary commitment to provide insurance coverage, and insurance
companies have additional time after issuing the binder to make a final decision about insurability and the amount of the
insurance premium. Therefore, it is important for you to submit an insurance application as early as possible.
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INSURANCE CONTINGENCY/APPLICATION. This Agreement
is
is not (is, if not checked) conditioned upon
Buyer obtaining a binder for a standard policy of homeowners or property insurance on the Property at an annual
premium not to exceed ½ of 1% of the purchase price Buyer is paying for the Property with a deductible not to exceed
$1000, exclusive of all additional declarations and riders (e.g., art, jewelry, earthquake, etc.). Buyer agrees to make
application for insurance within
days (5 days, if not filled in) after mutual acceptance of this Agreement. If
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Buyer fails to make application within the agreed time, then this insurance contingency shall be deemed waived. This
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insurance contingency shall be deemed satisfied, unless within
days (15 days, if not filled in) after mutual
acceptance of this Agreement Buyer gives notice of inability to obtain a binder on the terms set forth above. If Buyer
is unable to obtain a binder after making a good faith effort and timely gives notice of such inability, then this
Agreement shall terminate and the Earnest Money shall be refunded to Buyer. This contingency is not waived by a
waiver of the financing contingency provided for above. Notices given pursuant to this paragraph may be given on
NWMLS Form 90T.
Initials: BUYER:
BUYER:
16
DATE:
SELLER:
DATE:
SELLER:
16
DATE:
DATE:
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