This is the document used in real estate when a deal falls through. It releases both parties from the Agreement of Purchase and Sale, the buyer gets his deposit back and the seller is free to sell his house to someone else.
There seems to be a bit of confusion as to the difference between a "conditional" deal not going firm, and a firm and binding deal that doesn't close.
Often a home will sell conditional on financing & home inspection. There can be many other types of conditions, such as Solicitors approval, water testing, and even in some cases conditional on the sale of the Purchasers property. However in a hot real estate market, condition on sale of purchaser's property, or SPP, is not very common.
So, let's say the offer is conditional on home inspection. The clause indicates that the home inspection be satisfactory to the buyer, in their "sole and absolute discretion". This means if they aren't happy with the home inspection, for any reason, they can opt out of the agreement. Basically the clause is written in a way which indicates if the conditions haven't been waived by a certain time/date, the offer is null and void.
This is where the confusion sets in. The Seller, now annoyed that the deal is not going firm, threatens not to sign the Mutual Release, which unfortunately holds up the return of the deposit to the buyer. There are very strict rules around funds in Brokers Trust Account, which indicates the funds can only be released based on certain conditions being met. In this case, the mutual release being signed.
However, they don't have a deal. The conditions have not been waived or fulfilled, and the deal is dead. So the Seller can hold up the return of the deposit by being difficult with respect to the mutual release, or in some cases I suspect it could lead to legal proceedings. So unnecessary, and childish if you ask me. Grow up.
It's a different situation if the purchasers fail to close on a firm deal. Sellers often assume that if a deal doesn't close they are entitled to the deposit. Again, the funds cannot be released from the Trust Account until an agreement is reached. It becomes a legal issue. The Sellers may sue the Buyers for failing to fulfill the terms of the agreement, there could be damages assessed if the home sells for less than the buyer had agreed to pay, and then of course legal costs.
So the difference is, do you have a conditional deal or a firm and binding agreement. Very different situations with very different outcomes.
Our Broker, Ken McLachlan, has suggested that maybe the solution is to have a small deposit during the conditional period, with a further deposit once all the conditions have been removed. Sounds fair to me.