Time Saving Tips: Which Signatures are Required to Bind a Mutual Release?

09 September 2016

It is a common misunderstanding that a Mutual Release must be signed by the Broker Manager or Broker of Record to have a binding Mutual Release and to release held funds. For a Mutual Release to be binding it only requires the signature of both the buying and selling parties. The standard OREA Form 122 confusingly has a signature section for the Broker Manager or Broker of Record which is preceded by the following preprint:

"The Brokerage hereby releases all parties from any claim that the Brokerage may have had for commission or other remuneration in the above transaction, except as may be hereinbefore specifically provided."

In the eyes of RECO, the transaction is between the Buyer and the Seller. Therefore, the Brokerage is obligated to release the funds should both parties mutual want out. What this means is that if you are negotiating a Mutual Release at 11:00pm, you will be able to finalise the release immediately instead of waiting until the next day to obtain a manager’s signature. Consequentially, the Broker Manager’s or Broker of Record’s signature is not even required to complete the form. So, how does this knowledge benefit you? Get your client to execute the form then send immediately to the other party. Utilizing time as a negotiation element in this fashion can help safe guard your client’s interests from the other party changing their mind. Even if no one had changed their mind you will find that this helps speed up the process to release the deposit.