Addendum

TREC 12-3 — Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement

This addendum protects the seller in a loan assumption transaction by establishing a process and timeline for releasing the seller from personal liability on the assumed loan and/or restoring the seller's VA loan entitlement. Without a release of liability, the seller remains personally liable if th

Source: TREC
Form Number: 12-3
Category: Addendum
Revised: December 5, 2011

Used For

Residential Sales, Farm & Ranch

Form Outline

The TREC 12-3 form is organized into the following sections:

  1. Header and Property Identification
    Identifies the property and connects this addendum to the main purchase contract via the property address.
  2. Release of Seller's Liability on Loan to Be Assumed
    Sets the deadline for both parties to apply for release of the seller's personal liability on the assumed loan, and defines the consequence if the release is not approved by the closing date.
  3. Restoration of Seller's Entitlement for VA Loan
    Sets the deadline for both parties to apply for restoration of the seller's VA loan entitlement, defines the closing date consequence, and warns that VA entitlement restoration requires the buyer to be a qualified veteran with sufficient unused entitlement.
  4. Cost Responsibility and Deed Requirements
    Assigns all costs of the release and restoration process to the seller and requires the seller's deed to include any loan assumption clauses mandated by FHA, VA, or the lender.
  5. Signatures
    Provides execution lines for all buyers and sellers. Both parties must sign for the addendum to be binding.

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