Navigating Escalation Clauses in Saskatchewan

As a real estate professional in Saskatchewan, it’s important to stay current on evolving best practices, especially when it comes to competitive offer strategies like escalation clauses.

An escalation clause allows a buyer to automatically increase their offer price if higher competing offers come in. While this strategy can help buyers remain competitive without initially overpaying, Saskatchewan’s Real Estate Act requires that every offer clearly state a specific purchase price — not just a vague "X dollars over another offer."

Key points from the latest guidance:

• Offers must have a clear purchase price even if an escalation clause is included.

• Escalation clauses are permitted but must comply with The Real Estate Act and Commission Bylaws.

• Buyers can legally agree to increase or decrease the purchase price after negotiations, but escalation clauses must be structured carefully.

Advantages of Escalation Clauses:

• Buyers may secure a property without paying significantly more than needed.

• It streamlines bidding wars, reducing multiple counter-offers.

Disadvantages to Watch For:

• Sellers might reject escalation clauses altogether, finding them confusing or unfair.

• Without a maximum cap, buyers could pay far more than intended.

• Escalation clauses only address price — not other offer strengths like conditions or possession dates.

• Risk of exceeding property appraisal values, leading to financing complications.

Best Practices for Agents:

• Always protect and promote your client’s interests (Commission Bylaw 702).

• Include a maximum cap in escalation clauses to protect buyers from unintended financial exposure.

• Require proof of competing offers to trigger escalation.

• Encourage buyers to seek legal advice before using an escalation clause.

Important Warnings:

• Unprofessional conduct like misleading details about other offers violates Bylaw 701.

• Agents must not discourage clients from seeking legal advice (Bylaw 703).

Conclusion:
While escalation clauses can be a useful tool in today’s competitive market, they must be drafted carefully to comply with the law and best serve your client’s interests. Always consult legal counsel when drafting escalation clauses, and ensure your clients fully understand both the risks and advantages.