Contracts
What is 'material adverse change' (MAC) clause in Hawaii real estate agreements?
AA. A clause addressing the seller's right to make changes to the property before closing
BB. A provision allowing a party to terminate the contract if there is a significant negative change in circumstances (market crash, natural disaster, title defect) that fundamentally changes the nature of what was agreed✓ Correct
CC. A clause requiring immediate price adjustment if market conditions change after signing
DD. A lender provision allowing loan cancellation if property value decreases
Explanation
A material adverse change clause allows parties to exit a contract if circumstances change significantly and negatively after signing. In commercial real estate, MAC clauses may allow exit if the property suffers major damage, a key tenant leaves, or zoning changes. In residential contracts, similar provisions (damage or casualty clauses, force majeure) address events like tsunamis or lava flows destroying a Hawaii property before closing.
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