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What is a Escalation Clause In New Construction in Central Florida

Updated: Jan 28, 2023




When buying a new construction home in Central Florida, you may come across something called an escalation clause. An escalation clause is a provision in a contract that allows for an automatic adjustment to the contract price in the event that certain costs, such as labor or material prices, go up during the construction process.

The escalation clause is a way to protect both the contractor and the owner in case of cost increases. When the cost of materials or labor increases, the contractor will not be able to bear the additional cost, and they need to pass it on to the buyer. An escalation clause allows them to do so without any disputes.



For buyers, an escalation clause can be a safeguard against unexpected increases in the cost of their new home. It ensures that they will not have to pay more than they originally agreed to, even if costs go up during the construction process.

It's important to understand that escalation clauses are based on pre-determined factors such as inflation rates, cost of materials, and labor. These factors are agreed upon before the construction process starts. It's important to note that escalation clauses are not a guarantee of a final price, but rather a way to calculate the final price based on pre-agreed factors.



When buying a new construction home in Central Florida, it's important to understand the terms and conditions of the escalation clause. It's important to know what factors are considered, how the final price will be calculated, and what the limits of the clause are. This will help you to make an informed decision about whether or not to buy the home, and ensure that you are protected in the event that costs do go up.

In conclusion, an escalation clause is a common part of construction contracts, especially in new construction in Central Florida. It's a provision that allows for an automatic adjustment to the contract price in the event that certain costs, such as labor or material prices, go up during the construction process. Understanding the terms and conditions of the escalation clause is important when buying a new construction home in Central Florida.

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