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There may be instances where a client wants to add language to a real estate contract. In a 鈥渉ot market,鈥� it is not uncommon for a buyer to want an escalation clause added to the contract (for example, language stating the buyer will pay 鈥淴 amount more than the highest offer if other offers are present鈥�). Typically, an escalation clause such as this will be added to 鈥淧aragraph 11, Special Provisions鈥� (which is reserved for factual statements and business details) of the One to Four Family Residential Contract, but it might also be drafted as an addendum to the contract.聽

It is important to remember that a real estate contract is a legal document and any changes to the contract can impact the rights of the parties to the contract (the buyer and the seller). A license holder cannot draft an addendum or add language to the contract that defines or affects the rights, obligations, or remedies of the parties, and the Real Estate License Act and 星空体育app下载 Rules鈥攕pecifically 星空体育app下载 Rule 537.11(b)(5) -- prohibit this. A license holder who adds these terms to the contract in any manner, including drafting an escalation clause, is engaged in the unauthorized practice of law.

To avoid violating the law, a license holder whose client wants this type of language added to the contract, or has questions regarding the impact of specific language (such as an escalation clause) should always recommend the client consult with their attorney. Remember, a license holder who violates this may be subject to disciplinary action, which could include an administrative penalty between $500 - $3,000 per violation per day and/or possible license suspension or revocation.

We recently published a helpful video from our General Counsel, Vansessa Burgess on this important topic:聽