What Is A Contract Rider VS A Contract Addendum

What Is A Contract Rider VS A Contract Addendum?

Just when you think that a contract is fully executed, there may be further details that you want to add. Try not to fret, even though the contract is fully signed, dated, and even witnessed, you can add either a contract rider or a contract addendum.

Both documents are additional to a contract, though there are subtle differences between the two. It is important to know when you would use either document simply to provide a clear and defined agreement between all parties.

In this guide, we will detail what is a contract rider vs. a contract addendum and how to incorporate them into an agreement.

We will specifically look at the difference between a contract rider and a contract addendum, what is a contract rider, and what is a contract addendum. 

What's Ahead...

The Difference Between A Contract Rider And A Contract Addendum

There is, in fact, little difference between a contract rider and a contract addendum. Both documents are added at the end of a contract, even after it has been signed and dated.

Also, both contract riders and addendums are widely used in insurance, real estate, and law-making. While a contract rider specifies certain details to be added to a contract, a contract addendum changes, adds, or updates specific information in that contract. 

What Is A Contract Rider?

A contract rider can be considered as a document that notes further details, terms, or certain conditions to a contract. While the contract itself may be quite generic, a contract rider can add specific details to supplement the agreement.

These terms are created following a negotiation between the buyers and sellers prior to signing the full document itself. You could typically find one used in a contract for everything from performance to insurance, to real estate.

For instance, in a standard real estate purchase and sale agreement, the rider may stipulate certain deal-specific details including which property inspections a seller is required to pay for.

The contract rider may also include the particular date that a seller has to vacate a property by or the conditions of how and where a down payment is kept. These details are for inclusion in the agreement once the initial contract has been signed and refers back to it. 

You could even have two contract riders involved in the same overall agreement. In a contract of sale, a purchaser’s attorney will usually mark up the seller’s rider and the contract then propose further terms in the purchaser’s rider.

Both the purchaser and the seller can propose their own addendum to the original contract. As the addendum is prepared in addition to the contract, it may well include any credits for repairs or items that require repair as part of the agreement. 

How To Incorporate A Contract Rider Or Addendum Into A Contract

Once you have agreed on the terms and details of a contract rider, you can begin to incorporate it. In the very first introductory paragraph of the contract rider, you will need to state that it is a rider.

Of course, if it is actually a contract addendum then you will need to state that instead. 

To show the history of the additional details and to bring some context, make a note of the date of the contract and the specific parties included.

Make sure that all the additional details of the contract are noted in the rider. If any details are not included in the contract rider then there may be no legal backing behind them.

Below those details, the contract rider is signed by the relevant parties to demonstrate their consent to those supplementary terms though a witness can also be used for extra validity. 

What Is A Contract Rider VS A Contract Addendum (1)

What Is A Contract Addendum?

The similarities between contract riders and addendums (also known as addenda) mean that they are both known to be additions to many types of standard contracts.

The contract addendum refers back to the contract, unlike the contract rider which is typically used to add specific details.

It may add a few details yet the addendum is typically used to tweak, nullify, clarify, and update the information that is already included in the contract as it stands. 

Like the contract rider, a contract addendum will usually be signed and dated by all parties as part of the process for it to be added and binding.

The contract addendum could be a simple document that merely states the specific date that a contract is valid for.

However, the contract addendum could go even further by redefining payment schedules which could prove to be a crucial part of an existing agreement.

Contract addendums are so versatile that you could find them in home leases, purchase contracts, wills, and insurance policies. 

The contract addendum typically works by acting as supplemental and additional documentation to a contract. Though it will change that initial agreement that formed the basis of the contract, those changes are typically not fundamental.

Should the changes prove overexcessive and lengthy then it may be an easier option simply to draw up a new contract. In that case, a contract addendum should be to provide additional information to show how a contract should be clarified.

Final Thoughts

Before you decide whether you want to use a contract rider or a contract addendum, check with an attorney first. As there are so many similarities between both types of documents, there is an interchangeable element to both.

Shortly after the original contract, contract addendum, and contract rider are all fully executed, they can collectively be known as the ‘contract’. This is largely due to the fact that all the documents are intertwined with agreements between all parties. 

Frequently Asked Questions

What Is An Addendum When It Is Used In A Book?

An addendum is also known as an appendix when it is used in a book. It is typically used when an author needs to make additions to their writing after it has been printed or published.

The author can use the addendum to help explain any inconsistencies that they want to clarify. 

The addendum can also be used to expand on the author’s existing writing or even update it if any issues arose as the writing went to print. Instead of stopping the printing or destroying it, the addendum can come in the form of a text file for an e-book or a letter for a physical book.

What Different Types Of Contract Addendums Are There?

Though contract addendums are typically simple documents, they can mean different things depending on the contract they apply to.

For instance, when applied to a will, the contract addendum should mean that the will stays intact yet slight details are changed such as the disclosed amounts, provisions, and list of heirs.

In real estate, the contract addendum could confirm the change of agreed-upon price, what the transfer of property entails, and what improvements are required.

Finally, in insurance, the addendum can remove or add certain provisions to be included in the insurance policy’s coverage as defined by the individual to be covered.

Paul Martinez

Paul Martinez is the founder of BendingDestiny.com. He is an expert in the areas of finance, real estate, and eCommerce.  Join him on BendingDestiny.com to learn how to improve your financial life and excel in these areas. Before starting this blog, Paul built from scratch and managed two multi-million dollar companies. One in the real estate sector and one in the eCommerce sector.