The Addendum Regarding Residential Leases (TREC No. 51-1), dated 11-07-2022, is built for investment property sales where a tenant is already in place. It defines "Residential Lease" broadly — "any lease of the Property to a tenant including any addendum, amendment, or move-in condition form" — and states directly that the seller may not execute a new lease or amend an existing one without the buyer's written consent once the contract is signed.
Only two paths for the tenant's status at closing
The form forces a single choice between two boxes:
- A. Termination: all Residential Leases must be terminated by closing, and the seller delivers possession per Paragraph 10 of the contract with no tenant or other person in possession. The form immediately caveats itself: "This paragraph will not amend or terminate any existing lease. Consult an attorney and refer to the Residential Leases for rights to terminate before agreeing to this provision." Checking this box doesn't actually end the lease — it just states the deal's expectation that it will be ended some other way before closing.
- B. Assignment and Assumption: the existing lease is assigned by the seller and assumed by the buyer at closing — the buyer becomes the new landlord under the same lease terms.
What Option B requires
If the parties check Assignment and Assumption, the addendum adds several mechanical steps:
- Delivery of the lease itself — buyer already has copies, or seller must provide them within 3 days after the Effective Date, with a buyer termination right (earnest money refunded) if the buyer doesn't get them by a negotiated deadline. A separate checkbox covers an oral lease, disclosed by tenant name, rental amount, and term.
- Security deposit transfer — at closing, the seller transfers any security deposit (as defined under §92.102, Property Code) to the buyer, and the buyer delivers a signed statement to the tenant acknowledging the buyer has acquired the property, is now responsible for returning the deposit, and stating the exact dollar amount held.
- Seller's knowledge representations — to the seller's knowledge, the lease is in full force and effect; no tenant is in default or violation; no tenant has prepaid rent; no tenant is entitled to a rent offset; there are no outstanding tenant claims against the seller; there are no pending tenant disputes; and there are no side agreements or rights between landlord and tenant outside the lease itself. Any exceptions must be explained directly on the form.
What happens if one of those representations turns out to be false: Paragraph B(4) requires the seller to notify the buyer promptly and cure the problem within 7 days. If it's still untrue after that window, the buyer's sole remedy is to terminate within 5 days after the 7-day cure period expires — earnest money refunded. The Closing Date extends daily as needed to give both sides room to exercise these notice rights.