A buyer in California includes an escalation clause in her offer on a home in Walnut Creek, stating she will pay $5,000 more than any competing offer up to a maximum of $800,000. The listing agent receives another offer for $760,000. Under California law, what obligation does the listing agent have regarding the escalation clause?
Correct Answer
C) The listing agent must present both offers to the seller and explain how the escalation clause works
Under California Business and Professions Code §10176(e), the listing agent must present all offers to the seller. This includes offers with escalation clauses. The agent should explain the mechanics of the clause and let the seller decide how to respond. The agent has no authority to modify or reject offers.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
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