What Is 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.