Hello Jon,
Thank you for providing the jsbin. Indeed the checked binding only updates the model according to the selection and vise-versa. However un-checking is not currently supported.
A a work-around I could suggest you to uncheck the value manually with jQuery since the MVVM cannot handle it.
Do not hesitate to share an idea on the Kendo User Voice page to improve the MVVM framework to support this scenario.
Kind regards,
Petur Subev
the Telerik team
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