This short article is designed to help vendors understand the section 27 statement process and how it is used to gain access to your deposit early.
Section 27 statement explained
When you sell a property, the purchaser is required to pay a deposit to secure the purchase of the property. The monies are usually paid to the real estate agent and held in their trust account. Sometimes a deposit is held in the trust account of the vendor’s solicitor or conveyancer. Regardless of where the deposit is paid, it must remain in that account until settlement is complete.
After settlement, the deposit is released to the vendor less any applicable fees.
In Victoria, it is possible for a vendor to have their deposit released prior to the settlement date. This procedure is called an “early release of deposit” and is made pursuant to section 27 of the Sale of Land Act 1962. http://www.austlii.edu.au/cgi-bin/viewdb/au/legis/vic/consol_act/sola1962100/
Conditions for release
The following conditions apply and must be met before your deposit can be released:
- A written notice in accordance with section 27(3) of the Sale of Land Act 1962 is served on the purchaser’s conveyancer . This notice must set out the particulars of the property and provide details of any mortgage or caveat registered over the property. The section 27 should also contain a supporting statement from the vendor’s mortgagor confirming details of the mortgage. This should include the amount required to discharge the mortgage and confirmation of whether the vendor is in default.
- There are no outstanding conditions such as finance approval dates or building and pest inspection dates. The contract must also be outside of any cooling off period.
- The purchaser accepts title.
- The buyer is satisfied with the information contained in the notice.
- The purchaser indicates that they are satisfied within 28 days of receiving the notice.
There are a number of grounds upon which a purchaser may object to an early release of the deposit. The purchaser is deemed to consent to the request and the deposit will be released if no objection is made.
The section 27 process can seem complicated but is designed to protect both the buyer and seller and ensure that deposits are handled correctly. If you wish to gain access to your deposit early we recommend speaking to your solicitor or conveyancer to ensure that all documentation is completed correctly to give you the best chance of reaching agreement with the purchaser.
Our team at Parkston Lawyers can assist you with any questions you may have regarding the section 27 process.