Early release of deposit money– s 27 of the Sale of Land Act 1962
Written by Nagisa Takaki
Edited by Gabriella Ferraro
When buying a property, the purchaser is required to pay a deposit to the vendor as part of signing the contract of sale. The deposit is usually 10% of the purchase price as a part payment before settlement takes place.
Generally, the purchaser pays the deposit to the real estate agent and it is held in a trust account until the day of settlement.
When the vendor serves a section 27 statement
In Victoria, a vendor can have a deposit released before the settlement date. This procedure is called ‘early release of deposit’ pursuant to s 27 of the Sale of Land Act 1962.
What a section 27 statement includes
The completed and signed s 27 Statement must be served on the purchaser’s representative. It must include specific information from the vendor regarding the following -
details of mortgage on the property;
details of any other things that may affect the property; and
details of any caveat lodged under the Transfer of Land Act 1958 in respect of the land.
A letter from the lender that confirms the mortgage information must also be provided.
When a s 27 Statement is served and a deposit is released, the purchaser acknowledges that:
the particulars provided by the vendor in the statement are accurate;
the particulars given indicate that the purchase price is sufficient to discharge all mortgages over the property (less than 80%);
the contract is not subject to any conditions ensuring for the benefit of the purchaser; and
the purchaser has accepted title or may be deemed to have accepted title.
Objection to release
If the purchaser is not satisfied with the information disclosed in the section 27 statement, the purchaser may object, within 28 days.
A purchaser can object on the following grounds:
the vendor has not provided supporting evidence from the mortgagee as to the particulars of the section 27 statement;
the vendor owes more than 80% of the sale price; and
a caveat has been lodged in respect of the land.
In the instance that a purchase objects to the release of deposit, they must provide their reasons for not being satisfied.
If a purchaser does not respond with an objection and a s 27 statement has been served, the deposit will be released to the vendor.
Acceptance of title – section 27
Release of deposit shall only operate where the purchaser has accepted title or may be deemed to have accepted title.
In these circumstances, title is normally not accepted by the purchaser until completion. When seeking a release of the deposit under section 27, it includes a statement to the effect that the purchaser has accepted title.
For the purchaser, it is important to not rush and/or be pressured into signing a s 27. Where an estate agent is empowered to pay the deposit to the vendor pursuant to s 27, the estate agent may receive the commission early.
For the vendor, there is never a guarantee that the vendor will be able to access the deposit. The vendor should never rely on it. If the vendor wishes access to the deposit early, please contact you legal practitioner or conveyancer to prepare a s 27 statement.
If you need assistance or have any questions about a s 27 statement, please contact our office.