If you sign the Memorandum of Understanding (MOU) in this scenario, the developer may have the ability to increase the price of the home beyond the escalation cost, depending on the specific terms outlined in the MOU. The MOU, unlike a formal Sales Agreement, is typically not a legally binding contract but rather a document that outlines the preliminary understanding between you and the developer.
In many cases, an MOU might include provisions for price escalation, which allows the developer to adjust the price based on factors like rising construction costs or inflation. However, without the detailed protections typically found in a Sales Agreement, there could be additional risks. For example, the developer might retain the right to increase the price further after the home is completed, depending on the specific wording in the MOU.
It’s essential to closely examine the MOU for any clauses that might allow for price adjustments beyond the stated escalation cost. If the language in the…
