New Bulletin - July 2, 2021

Escalation Clauses Do Not Comply With the Act

Escalation Clauses Do Not Comply With the Act

This is a reminder to the industry that the use of escalation clauses in an Agreement of Purchase and Sale (APS) violates Section 30 (d) of the Real Estate Trading Act, therefore licensees cannot use them when preparing offers. An escalation clause is a formula used in place of or in addition to an actual purchase price, i.e. $X amount over the highest price offered in competing APSs. Recording a purchase price in an APS and then adding an escalation clause in an addendum or schedule does not comply.

To view the Real Estate Trading Act, click HERE.