Third Party Financing Addendum {40-11}

TREC NO. 40-11 - THIRD PARTY FINANCING ADDENDUM. This form promulgated by the Texas Real Estate Commission (TREC) is used in real estate transactions to outline and document the terms under which a buyer will seek and obtain financing from a third-party lender to purchase a property. This form becomes part of the purchase contract and provides detailed information regarding the type of loan(s) the buyer intends to apply for, such as conventional, FHA, VA, USDA, Texas Veterans, reverse mortgage, or other financing. It establishes the buyer’s obligation to promptly apply for financing and make a good-faith effort to secure loan approval. The addendum specifies the conditions under which the buyer can terminate the contract if financing is not approved (referred to as “Buyer Approval”) or if the property does not meet lender underwriting criteria (referred to as “Property Approval”). For FHA and VA loans, it also includes mandatory federal provisions that allow the buyer to cancel the contract if the appraised value does not meet the sales price or if loan approval is not granted, without penalty or forfeiture of earnest money. The form authorizes the buyer’s lender to release loan status updates and closing documents to the parties and their agents. Overall, this addendum protects both parties by clearly defining the rights, responsibilities, and contingencies related to financing in the real estate transaction. www.FormsWorkflow.com