What Is a Release Clause in Real Estate? Everything You Need to Know
Real estate transactions often involve legal complexities, especially when multiple buyers or properties are in play. One term that frequently arises in such situations is the “release clause” — a protective legal provision built into real estate contracts. Whether you’re buying, selling, or brokering a deal, understanding how a release clause in real estate works can help you navigate offers more strategically.
What Is a Release Clause in Real Estate?
A release clause in real estate is a contractual provision that allows a seller to continue marketing their property even after accepting a contingent offer from a buyer. If another qualified buyer makes an offer, the original buyer is given a specific period (usually 24 to 72 hours) to remove their contingencies — such as selling their current home — or walk away from the deal.
This clause is also referred to as:
- Kick-out clause
- Escape clause
- 72-hour clause
How Does a Release Clause Work?
Here’s a step-by-step example:
- Buyer A makes an offer on a home, contingent on selling their current house.
- The seller accepts but includes a release clause in the contract.
- While Buyer A waits to sell, the seller continues to market the home.
- Buyer B comes along and submits a better or non-contingent offer.
- The seller notifies Buyer A, who has, for example, 72 hours to either:
Remove their contingency and proceed, or
Withdraw, releasing the seller to accept Buyer B’s offer.
Why Use a Release Clause?
- Protects the seller’s interest by not tying them down to a single contingent offer
Encourages quicker decisions from the first buyer
Keeps the property competitive and on the market
Minimizes delays in closing
When Is a Release Clause Commonly Used?
- In slow markets where sellers want to keep options open
- When buyers need to sell their existing home before closing
- In hot markets, to keep seller leverage high
- In pre-construction deals, where timelines and financing are flexible
Pros and Cons of a Release Clause
| Pros for Sellers | Cons for Buyers |
| Keeps the home on the market | Adds pressure to act quickly |
| Provides flexibility and leverage | Risk of losing the property to another buyer |
| May result in a better, non-contingent offer | Can feel like a lack of commitment from seller |
Legal Considerations
- Time Frame: Must be clearly defined (e.g., 72 hours)
- Notification: Sellers must notify the original buyer in writing
- Contingency Removal: If the buyer waives the contingency, they must proceed or forfeit earnest money
- State Laws Vary: Always consult a real estate attorney to comply with local regulations
Example Clause Language
“Seller shall have the right to continue to market the property. If Seller receives another acceptable offer, Buyer shall have 72 hours to remove all contingencies. Failure to do so shall result in cancellation of this agreement and release of the property to Seller.”
Tips for Buyers Dealing With a Release Clause
- Secure financing early to reduce your contingencies
- Get your current home under contract quickly
- Have a backup plan in case you lose the deal
- Consult a buyer’s agent or attorney to protect your rights
Conclusion
A release clause in real estate is a powerful tool, especially for sellers in competitive markets or buyers with contingent offers. Understanding how it works can help both parties make smarter, faster, and more confident decisions. Always work with an experienced real estate agent or attorney to ensure your contract is fair, enforceable, and aligned with your goals.
FAQs
1. What is a release clause in a real estate contract?
A release clause is a provision that allows a seller to continue marketing their property after accepting a contingent offer. If another buyer makes an offer, the original buyer must remove their contingencies—typically within 24 to 72 hours—or risk losing the deal.
2. Why do sellers use a release clause?
Sellers use a release clause to protect themselves from long delays and keep their property active on the market. It gives them the flexibility to accept a stronger, non-contingent offer if one comes along.
3. How does a 72-hour release clause work?
When triggered, a 72-hour clause gives the original buyer three days to either remove all contingencies (like selling their current home) or exit the contract. If the buyer doesn’t act, the seller is free to move forward with a new offer.
4. Can a buyer refuse a release clause?
Yes, but the seller may choose another offer. Refusing a release clause can make your offer less appealing in competitive markets, especially if your offer includes financing or sale contingencies.
5. Is a release clause legally binding?
Yes. A properly written and signed release clause is legally enforceable as part of the real estate purchase agreement. Buyers and sellers should consult with a real estate attorney or agent before agreeing to the terms.
Also read: Encumbrance Definition in Accounting: What It Means and Why It Matters
