Addendum

TREC 51-1 — Addendum Regarding Residential Leases

This addendum addresses the status of existing residential leases when a property with tenants is being sold. It provides two mutually exclusive options: (A) requiring all leases to be terminated before closing so the buyer takes vacant possession, or (B) assigning existing leases from seller to buy

Source: TREC
Form Number: 51-1
Category: Addendum
Revised: November 7, 2022

Used For

Residential Sales, Farm & Ranch

Form Outline

The TREC 51-1 form is organized into the following sections:

  1. Header and Property Identification
    Identifies the property and defines key terms. 'Residential Lease' is defined to include any lease plus any addendum, amendment, or move-in condition form associated with it.
  2. Termination of Residential Leases
    If selected, all residential leases must end before closing. The seller must deliver the property vacant with no tenants or persons having occupancy rights. Importantly, this paragraph alone does not terminate any lease -- the seller must take separate action to terminate leases according to their terms.
  3. Assignment and Assumption of Residential Leases
    If selected, existing leases transfer from seller to buyer at closing. This section is divided into four subsections covering lease document delivery, security deposit transfer, seller representations about lease status, and a cure/termination process for untrue representations.
  4. Delivery of Residential Leases
    Addresses how lease documents are delivered to the buyer. Three checkboxes (a, b, c) cover whether the buyer already has copies, whether the seller must provide copies within 3 days, and whether oral leases exist that must be disclosed with specific details.
  5. Security Deposit Transfer
    Requires the seller to transfer all tenant security deposits to the buyer at closing. The buyer must then provide each tenant a signed written statement confirming the buyer's acquisition of the property, the buyer's responsibility for returning deposits, and the exact deposit amount.
  6. Seller's Representations Regarding Lease Status
    Contains seven seller representations about the status of each lease, covering lease validity, tenant compliance, prepaid rent, rent offsets, tenant claims, disputes, and side agreements. If any representation is inaccurate, the seller must explain the exception in the provided space.
  7. Notification and Cure of Untrue Representations
    Establishes the process when a seller's representation becomes untrue after the Effective Date. The seller must promptly notify the buyer, then has 7 days to cure. If uncured, the buyer has 5 additional days to terminate and receive an earnest money refund. Failure to terminate within the deadline waives the right. The closing date automatically extends to accommodate these timelines.
  8. Signatures
    Provides signature lines for up to two buyers and two sellers. All parties to the main contract should sign this addendum.

How RaiderX Agents Use This Form

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