When FHA rules require an amendatory clause, the seller ordinarily must agree to it as part of the signed purchase contract or a valid signed amendment. There is not necessarily a separate signature form if the required language is already incorporated into the contract. The lender must obtain the required signed contract documents. [1]
What triggers the requirement?
HUD’s handbook requires the contract to be amended before closing when the borrower did not receive the specified written statement of appraised value before signing the sales contract. The handbook also lists exceptions for particular transaction types. A general statement that every FHA-related sale needs the same separate addendum misses those conditions. [1]
What protection does the clause provide?
The model clause protects the purchaser from being obligated to complete the purchase or forfeit earnest money merely because the required appraised-value condition is not satisfied. The purchaser retains an option to proceed despite a lower valuation. HUD’s model also states that the appraisal determines the maximum mortgage HUD will insure and is not a warranty of value or condition. [2]
For example, if the contract price exceeds the FHA valuation, the clause does not automatically force the seller to lower the price. The parties can consider a revised price, an allowable buyer contribution, or the buyer’s contractual options. The financing and contract terms still need to support the chosen path.
Use the correct price and documents
HUD’s model directs the lender to insert the actual contract sales price into the clause. A price increase requires a revised clause. Missing figures or an outdated amount can therefore create more than a cosmetic paperwork problem. [2]
The real-estate certification concerning the agreement’s truth and completeness is a related but distinct requirement. The handbook addresses when a separate certification is unnecessary because the signed contract already includes the required statement. [1]
If the seller objects
- Ask the lender which requirement applies to the transaction.
- Check whether the contract already contains the language.
- Confirm any applicable exception.
- Explain the appraisal protection without promising a price reduction.
- Resolve the paperwork before closing.
A seller can decide whether to accept the proposed financing arrangement, but the lender cannot simply disregard a requirement that applies. Related housing issues include Fair Housing Act coverage and voucher household approval, which arise under different federal housing frameworks.
Primary sources
Sources checked: October 31, 2026.