A document that changes or modifies existing terms within a contract both parties have already signed.
Why Amendment matters on the exam
This term belongs to Contracts. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Amendment
Every Freehold question shows why the right answer is right — and cites its source.
A purchase contract is amended in writing to reduce the buyer's earnest money deposit by $500 as a credit toward inspection repairs, to be paid to the seller before closing. The broker may:
Refuse any disbursement until the transaction fully closes, regardless of the amendment
Disburse the full deposit early since a change was made to the contract
Disburse the $500 as specified in the written amendment
Require a court order before releasing any partial funds
Show answer & explanation
Disburse the $500 as specified in the written amendment — A written amendment signed by the parties is a valid basis for disbursement, since it documents their mutual agreement authorizing that specific release of trust funds before closing.
Source: PSI National Real Estate Exam Content Outline — Broker Supplement
Which of the following would terminate an agency relationship by operation of law?
The agent submitting a lowball counteroffer
A buyer requesting a home inspection
The parties extending the listing term by written amendment
The bankruptcy of the principal
Show answer & explanation
The bankruptcy of the principal — Operation of law terminates agency through events like bankruptcy, death, incapacity, or the property becoming subject to condemnation, none of which require either party's consent.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
The key distinction between an addendum and an amendment to a purchase contract is that:
An amendment may generally just be made verbally, but an addendum must always be reduced to writing first
An addendum typically adds new terms, while an amendment typically changes or replaces existing terms
Only a supervising broker, and never a salesperson, may lawfully create an addendum, regardless of that salesperson's years of experience
An amendment generally terminates the underlying contract once the parties sign it
Show answer & explanation
An addendum typically adds new terms, while an amendment typically changes or replaces existing terms — An addendum generally supplements the original agreement with additional provisions, while an amendment modifies or replaces specific terms already contained in the existing signed contract.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
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