Contracts
In Virginia, an escalation clause in a purchase offer automatically increases the buyer's offer by a set amount above competing offers up to a maximum. This clause is:
AProhibited by VREB
BA legal and common tool in competitive Virginia markets like Northern Virginia✓ Correct
COnly permitted in commercial transactions
DRequired by lenders on all FHA loans
Explanation
Escalation clauses are legal in Virginia and widely used in competitive markets such as Northern Virginia, where multiple offer situations are common. The clause must specify the increment and maximum price.
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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.
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.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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