What is the primary purpose of a backup contract addendum?

What is the primary purpose of a backup contract addendum?

• A. To secure financing for the buyer
• B. To place a buyer in a secondary legally binding position
• C. To confirm acceptance of changes made to the primary contract
• D. To outline terms of possession before closing

Answer: (B)

The primary purpose of a backup contract addendum is to place a buyer in a secondary legally binding position. This type of addendum is typically used when there is already an existing contract on a property, but the buyer is interested in the property and wants to secure their place as a backup in case the primary contract falls through. This position allows the buyer to have the opportunity to step in and purchase the property if the current agreement is not fulfilled, such as if the primary buyer is unable to complete the transaction for any reason. This mechanism benefits both the backup buyer and the seller, as it keeps the seller's options open while reassuring the backup buyer that they are next in line. Without such an arrangement, the backup buyer may miss the chance to purchase the property altogether if the initial sale does not succeed.

The primary purpose of a backup contract addendum is to place a buyer in a secondary legally binding position. This type of addendum is typically used when there is already an existing contract on a property, but the buyer is interested in the property and wants to secure their place as a backup in case the primary contract falls through. This position allows the buyer to have the opportunity to step in and purchase the property if the current agreement is not fulfilled, such as if the primary buyer is unable to complete the transaction for any reason.

This mechanism benefits both the backup buyer and the seller, as it keeps the seller's options open while reassuring the backup buyer that they are next in line. Without such an arrangement, the backup buyer may miss the chance to purchase the property altogether if the initial sale does not succeed.