What Are Riders to Real Estate Purchase and Sale Agreements?

Learn the value of including riders in your P&S agreements.

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Question

We are in the middle of buying our first investment property and my attorney just sent back the revised Purchase and Sale (P&S) Agreement with an additional 12 extra pages, called a “Rider.” Does my attorney really need to add all this detail or is he just adding on unnecessary work so he can charge me more for handling the purchase?

Answer

Riders are extremely common for most purchase and sale agreements. The reason why attorneys add in a rider (or “addendum”) to the P&S agreement is because they are accustomed to certain language that has better covered their clients’ interests in the past than a stock P&S form may account for.

When you look through the rider, it may appear that some sections are redundant with sections in the standard P&S form preceding the rider. This is okay. These provisions may include buyer’s obligations, seller’s warranties, or instructions on when notice has officially been given to the buyer or seller. Upon a closer look, these provisions are not restatements but rather expansions on what’s in the original P&S agreement, ensuring that you are covered in the manner your attorney sees fit.

Where there may appear to be duplicate information, your attorney should account for this by adding a section in the rider noting that where there appears to be a conflict or a diversion in language between the rider and the original purchase and sale agreement, the rider wins out.

Example: “In the event of a conflict between the terms and provisions of the attached Purchase and Sale Agreement and Rider, the terms and conditions in the Rider shall prevail.”

If you are purchasing a commercial property you should fully expect to see a rider to the P&S, as it will cover nuances in the transaction that are likely not covered in standard P&S forms. These may include:

  • Hazardous Waste Provisions. These ensure that the property is compliant with hazardous waste concerns, as outlined by state laws. There is language in several standard P&S forms regarding hazardous waste but they typically don’t go into enough detail to fully cover the buyer’s interests.
  • Tenant Status. Some references to the current tenants will be made, whether they are exhibits or warranties pertaining to the tenant roster and current rent roll, providing assurances that they have been represented properly by the seller.
  • Additional Agreements. These could be credits back to the buyer to address needed repairs, or representations from the seller that certain repairs will not exceed a certain amount, once the buyer is the owner.

While at first glance it may look like an attorney is padding their bill by adding on more pages to the P&S, they are likely saving themselves time, and thus you money, by including the rider. Rather than having to revise every section of the standard form, attorneys can utilize rider provisions that have been appropriate in other transactions they’ve handled and reference them when creating the rider for your P&S. A rider is an indication that your attorney has experience, and you may have more concerns if a rider absent than present, particularly when buying an investment property.

For advice on standard offers for residential real estate, see the Nolo article Making an Offer to Buy a House.

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