You and your buyers may think adding an escalation clause to Special Provisions is a great way to ensure your buyer’s offer is accepted. Such a clause changes the buyer’s offered purchase price based on outside variables. For example, an escalation clause could say a buyer will pay $1,000 more than any other offer.
However, TREC rules prohibit license holders from writing escalation clauses. TREC Rule 537.11(b)(5) says license holders may not “draft language defining or affecting the rights, obligations, or remedies of the principals of a real estate transaction, including escalation, appraisal, or other contingency clauses.”
That means you cannot put language in a contract that changes what the contract allows or requires a party to do. According to TREC, a license holder drafting language of this type is considered the unauthorized practice of law.
If your buyer requests an escalation clause in his offer, suggest that he speak with an attorney. If your sellers receive an offer with an escalation clause, they can seek legal advice or ask the buyer to resubmit the offer without that provision using the Seller’s Invitation to Buyer to Submit New Offer (TXR 1926). Advising your clients how escalation clauses will affect their contract is considered giving legal advice, which license holders may not do.