An addendum is a thing to be added; an addition. For example, it may be used to add supplemental terms or conditions to a contract or make corrections or supply omissions to a document. An addendum is often used to supply additional terms to standardized contracts, such as leases. Addendum is singular; the plural form is addenda.
The Massachusetts Price Escalation Addendum to Agreement of Sale is a legal document that is often included in real estate transactions in Massachusetts. This addendum serves as an additional provision to the standard Agreement of Sale and offers protection for both the buyer and seller in the event of price escalation. The purpose of the Price Escalation Addendum is to address the potential market fluctuations and rising prices in the real estate market. It provides a mechanism for adjusting the purchase price of a property if the appraisal value comes in lower or if competing offers drive up the price during the negotiation process. There are several types of Massachusetts Price Escalation Addendum to Agreement of Sale that may be utilized, depending on the specific needs and preferences of the parties involved: 1. Fixed Percentage Addendum: This type of addendum allows for a predetermined percentage increase in the purchase price in case the appraisal value comes in lower than the agreed-upon price. For example, if the agreed-upon price is $500,000 and the fixed percentage stated in the addendum is 5%, the purchase price would increase to $525,000 if the appraisal comes in lower. 2. Comparative Market Analysis (CMA) Addendum: This addendum utilizes a CMA report to determine the fair market value of the property. If the appraisal value comes in lower than the CMA value, the purchase price may be adjusted accordingly, usually by a percentage specified in the addendum. 3. Competitive Offer Addendum: This type of addendum is used when there are multiple offers on a property. It allows the buyer to increase their offer by a pre-determined amount above the highest competing offer, up to a maximum price specified in the addendum. It is important to note that the specific terms and conditions of the Price Escalation Addendum may vary depending on the preferences of the parties involved and may need to be reviewed and negotiated by both the buyer and seller before signing the Agreement of Sale. In conclusion, the Massachusetts Price Escalation Addendum to Agreement of Sale is a valuable tool that provides a mechanism for adjusting the purchase price of a property in the event of market fluctuations or competing offers. Its various types, such as the Fixed Percentage Addendum, CMA Addendum, and Competitive Offer Addendum, offer flexibility and protection for both buyers and sellers in the ever-changing real estate market.
