Mutual Release – Execution and Irrevocable Clause

Execution of the Mutual Release in Real Estate Transactions | Ontario Real  Estate Source


What is the purpose of the irrevocable on a mutual release?

If a buyer is not fulfilling conditions and both parties agree to release, is the irrevocable period necessary?

Can I just leave it blank?


The Mutual Release form has been amended and updated by OREA. Previously, it did not contain an “irrevocable cause”. The update has such a clause included.

Most commercial and consumer contracts do not include an irrevocable time. It’s not that it doesn’t exist in some way. It does. However, the “open for acceptance time” is verbal, in a letter or email. In the case of appliances for sale, the salesman may say: “the sale ends tomorrow”. So, consumers know that if they don’t buy the appliance by closing time tomorrow, the sale ends and the offer is “off the table”.

That was always the case with mutual releases anyways. The “time limit” would be included in the correspondence. If there was no specific time mentioned, then it would be interpreted by the Courts as being “a reasonable time in all of the circumstances”. However, you can appreciate that that would be risky.

Hence, the OREA update! The current form includes the irrevocable clause. Your choices would be:

  1. Use the clause,
  2. Strike the clause out and place the irrevocable time period in an email or other correspondence,
  3. Ignore the clause, do not strike it out, send the mutual release with the expectation that it is “open ended” and that the Court will figure out what a reasonable time in the circumstances would be in your case,

You will appreciate that #3 is somewhat risky. That was the reason for the OREA change in the first place.

Naturally, if all parties are onside, then there’s no problem going forward. Your paperwork is not receiving marks for excellence! The only time that there is a problem is if the second party finally accepts the offer, agrees and signs the mutual release, but the first party now says: “it’s too late now. In this case, there’s a problem, and it would have be better to have selected #1 as your course of action.

Brian Madigan LL.B., Broker

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