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Contracts Need Face-Lifts Too

Contractual agreements often last for years. During that time, circumstances often change and so do the needs and priorities of the participants. Some underlying contracts require than any amendments or changes are required to be made in writing. Yet people frequently make handshake agreements to change important contractual terms. If the agreement was important enough to put in writing in the first place (and most agreements are), then why do people think changes to the agreement can be made on a handshake... or based on a text message?

A popular example is the lessee-lessor arrangement. After a few years of tenancy, a landlord may wish to raise the rent or impose new terms. Another common example is a homeowner who wishes to refinance in order to utilize the equity in his or her home. While lenders would not dare to refinance without creating the proper paper trail, individuals often fail to do so. Then, when it comes time to enforce their agreement, they have nothing to show but an outdated agreement and a set of handshakes.

There is a better a way. Tara Burd, San Diego Civil Law Attorney was quoted in the Boston Globe on line news service, as saying “Planning ahead and protecting your interests and relationships, makes sense.”

The first lesson in updating a contract is not to touch the original contract. Do not cross out dates and write in new ones. Do not cross out terms and interlineate new amounts. Do not use white out. Just leave the original agreement alone.

The next step is to decide to what extent the old agreement will continue to govern. When updating a rental agreement, the new terms typically consists of rental amounts and a new rental period. In this case, it is not necessary to create an entirely new lease. The old lease will usually be sufficient and it contains important provisions about the landlord-tenant relationship and expectations of the parties.

Instead, it is sufficient to create an addendum. The new addendum should state that "To the extent that there are any conflicts between the provisions of the Agreement and the provisions of this Addendum, the provisions of this Addendum shall supersede the conflicting provisions of the Agreement." The line is necessary to clarify which document is controlling if there is a conflict. The addendum should also reference the original document that it is updating. Include the name of the document, signors and the relevant dates.

Alternatively, it may be necessary to create an entirely new agreement. The important key to remember here is to again, reference the original document, and then use language that makes it clear that the new agreement supersedes all past agreements verbal and written.

These steps are simple. However, the failure to take these minimum precautions often leaves wronged parties without a remedy.

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