Release from Prior Agreement

This is an interesting clause which some agents use:

Release from Prior Time Agreement

The acceptance of this offer is conditional upon the Seller obtaining a properly executed Mutual Release from a prior agreement of purchase and sale within _________ hours of acceptance of this offer, failing which, upon the completion of a properly executed Mutual Release for this agreement, the deposit will be returned to the Buyer without interest or deduction. This is a true condition precedent and may NOT be waived by the Seller.”

Here’s the clause pulled apart:

“The acceptance of this offer is conditional

 upon the Seller obtaining

a properly executed Mutual Release from a prior agreement of purchase and sale

within _________ hours of acceptance of this offer,

failing which,

upon the completion of a properly executed Mutual Release for this agreement,

the deposit will be returned to the Buyer without interest or deduction.

This is a true condition precedent and may NOT be waived by the Seller.”

REVIEW

Same clause with comments in Italics:

“The acceptance of this offer is conditional

It’s something in the deal which is to be conditional, and not truly “acceptance”. That would mean that we don’t have any agreement at all.

 upon the Seller obtaining

One person, namely the Seller is to obtain

a properly executed Mutual Release from a prior agreement of purchase and sale

how do you know whether the mutual release is properly executed. Maybe it is and maybe it isn’t

This refers to another deal, done earlier between the Seller and the first buyer

within _________ hours of acceptance of this offer,

when does that start?

Here for this deal, we have both “acceptance” and the “conditional acceptance”.

failing which,

meaning if this doesn’t happen, then….

upon the completion of a properly executed Mutual Release for this agreement,

Which agreement is this one for: Buyer #2, or the first one?

If the reference is this second agreement, then, there is absolutely no purpose for this clause at all

the deposit will be returned to the Buyer without interest or deduction.

If the reference is to the prior agreement, then, the consequence is wrong!

Don’t  we want the Mutual Release for the first, then the second will be a “go ahead”?

This is a true condition precedent and may NOT be waived by the Seller.”

Maybe we do want the Seller to have a choice. Maybe the first Buyer is in breach of their contract. That allows this deal to go ahead, naturally at the Seller’s risk.

Be sure to read all these clauses carefully before the “copy and paste”.

Brian Madigan LL.B. Broker

www.OntarioRealEstateSource.com

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