Here’s a complete list of possible questions about the Mixed Use Purchase Addendum with explanations for each:

1. What is the purpose of the Mixed Use Purchase Addendum?

It modifies the Residential Purchase Agreement to address the unique issues of properties that have both residential and commercial uses, ensuring both parts of the property are properly addressed in the contract.

2. When is this addendum required?

It is generally used when the property includes both residential living space and space intended for commercial or retail operations, such as an apartment above a storefront.

3. How does financing work for a mixed-use property?

Lenders may treat mixed-use properties differently than purely residential properties, potentially requiring commercial financing or different appraisal standards. The addendum helps set expectations regarding financing contingencies.

4. Are there special disclosure requirements for mixed-use properties?

Yes. Sellers must disclose zoning, permitted uses, leases for commercial tenants, and any code violations affecting either the residential or commercial portions.

5. Does this addendum address zoning compliance?

It typically clarifies whether the buyer is accepting the property “as-is” regarding zoning or if the seller must provide evidence of compliance with current zoning regulations.

6. How does the addendum handle existing commercial tenants?

It outlines whether any commercial leases will remain in place, be terminated, or be assigned to the buyer at closing, and requires delivery of lease copies.

7. Can the buyer terminate the deal if zoning or permitted uses are not as expected?

Yes, depending on how the addendum is written. There may be a contingency allowing the buyer to cancel if due diligence reveals zoning issues or restrictions that interfere with intended use.

8. How does the addendum address allocation of purchase price between residential and commercial portions?

Some agreements require stating how much of the price is attributed to each part for tax or financing purposes.

9. Are there special insurance considerations for mixed-use properties?

Yes. The buyer may need both residential property insurance and commercial liability insurance. The addendum may require proof that coverage can be obtained before closing.

10. What inspections are recommended for a mixed-use property?

In addition to a standard home inspection, commercial property inspections, environmental reports, and code compliance checks are recommended. The addendum often states these are at the buyer’s option and expense.

11. Does this addendum address ADA compliance?

If the commercial portion is open to the public, it may require Americans with Disabilities Act compliance. The addendum can clarify who is responsible for any upgrades.

12. How are utilities addressed in the addendum?

It may clarify whether the residential and commercial units have separate utility meters or shared services, and if separate billing is required.

13. Does the addendum address environmental hazards?

Yes, especially if the commercial space previously housed businesses involving chemicals, fuel, or other hazardous materials. Environmental clearance may be required before closing.

14. How does this affect property taxes?

Mixed-use properties may have different tax rates for residential and commercial portions. The addendum can clarify whether tax allocation is known or will be investigated during escrow.

15. What happens if the buyer intends to convert the property to fully residential or fully commercial?

The addendum may require the buyer to acknowledge that such a conversion could require permits, zoning changes, and compliance with building codes.