Section 27 Explained: Early Release of Deposit in Victoria Made Simple

When buying or selling property in Victoria, one question that often arises is whether the seller can access the deposit before settlement. The answer lies in section 27 of the Sale of Land Act 1962 (Vic), which sets out the rules for what is commonly called the “early release of deposit.”

This process allows a seller to request access to the deposit prior to settlement, but only under strict conditions designed to protect both parties. Understanding how it works can help avoid delays and manage expectations.


What is a Section 27 Statement?

A Section 27 Statement is a written request from the seller asking for the deposit to be released early. Normally, the deposit is held in trust by the real estate agent, solicitor, or conveyancer until settlement.
The statement must include key details so that the buyer can make an informed decision:

1. Details of any mortgages registered over the property
2. Confirmation of the mortgage details from the bank (or other lender)
3. Information about any caveats on the property’s title
   
   

When Can a Section 27 Statement Be Served?

A seller can serve a Section 27 Statement before the contract becomes unconditional, but this is usually premature. Buyers are unlikely to consent until:

• Any cooling-off period has passed, and
• All buyer conditions (such as finance approval or building/pest inspections) have been satisfied.
  At an auction, however, contracts are unconditional from the outset. This means the Section 27 process can be initiated straight away.
  
  

When Might a Buyer Refuse Consent?

Buyers do not have to consent to early release in every case. Common reasons for objection include:

• The seller has not fully or accurately disclosed mortgage or caveat details
• The mortgage debt exceeds 80% of the purchase price
• There is a caveat registered on the title
• The contract still contains outstanding conditions for the buyer’s benefit
• The property is sold off the plan (these contracts are not eligible for Section 27 release)
  From the buyer’s perspective, early release carries some risk. If the seller’s mortgage isn’t discharged, or if settlement fails, recovering the deposit can be complex and may require legal action.
  
  

What Happens If You Receive a Section 27 Statement?

If you are a buyer and receive a Section 27 request, you have three options:

1. Consent – sign the statement to authorise early release
2. Object – respond in writing with valid grounds
3. Do nothing – if you don’t reply within 28 days, consent is deemed to have been given and the deposit will be released
   To further protect themselves, buyers sometimes choose to lodge a caveat on the title, ensuring their interest in the property is formally recorded until settlement.
   
   

Key Takeaways

Section 27 is designed to strike a balance between the seller’s need for access to funds (often for bridging finance or cashflow) and the buyer’s right to security.

For sellers, it can be a helpful tool – but only if the conditions are satisfied. For buyers, it is important to review the statement carefully and seek advice before consenting.

Lawlab can help buyers and sellers navigate the early deposit requests as part of its conveyancing service.