What is……….. A Section 27 (or early release of deposit)?

The Section 27 of the Sale of Land Act 1962 (Victoria) allows a vendor to access the deposit paid by the purchaser before settlement, provided certain conditions are met. This is commonly referred to as an “early release of deposit.” 

For a Section 27 release to occur a few things need to happen: 

1. The Contract Allows It – The contract of sale must not prohibit the early release. 

2. The Vendor Provides a Section 27 Statement – The vendor must disclose details about any mortgage or caveats on the property. 

3. The Purchaser Consents or Does Not Object – The purchaser has 28 days to object to the release, typically if they believe the vendor’s disclosed financial position suggests a risk (e.g., high mortgage relative to sale price). 

4. The Vendor’s Mortgage Is Low Enough – Generally, the total debt on the property must be below 80% of the sale price or valuation, ensuring the purchaser’s deposit is not at risk. 

If the purchaser does not object within the 28-day period, the deposit can be released to the vendor. If they do object, the deposit remains in the trust account until settlement. 

Do you need more help determining whether a Section 27 applies in your specific situation? 

If you’re selling your home and buying another but don’t have cash on hand for the deposit, you have a few options: 

1. Deposit Bond – A guarantee issued by an insurer that acts as a deposit, which is paid in full at settlement. 

2. Early Release of Deposit (Section 27 in VIC) – If the buyer of your home agrees, you may access their deposit before settlement. 

3. Personal Loan or Line of Credit – Short term finance from a bank or lender to cover the deposit. 

4. Borrowing from Family – If available, a family member may assist with the deposit, to be repaid at settlement. 

If you need more help determining which option is suitable for your circumstances, please feel free to reach out, we’re here to help.