Contracts
In Rhode Island, what is an 'escalation clause' in a purchase offer?
AA clause that increases the rent each year
BA clause that automatically increases the buyer's offer price by a set increment above any competing offer, up to a maximum amount✓ Correct
CA clause requiring the seller to make escalating repairs
DA clause triggering automatic closing date extension
Explanation
An escalation clause in a purchase offer automatically increases the buyer's offer by a specified amount above any competing offers (up to a stated maximum). It is used in competitive markets to help buyers win bidding wars.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
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