Why Section 27 Deposit Releases Often Benefit Agents More Than Sellers

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The Real Story Behind Early Deposit Releases

In Victoria, when a purchaser signs a contract and pays a deposit, those funds are held in trust—typically until settlement.

However, real estate agents frequently encourage vendors to sign a Section 27 deposit release form to allow early access to those funds.

The motivation behind this push is almost always the same: the agent gets paid sooner.

The Vendor’s Perspective: Is It Really Worth It?

Most vendors who agree to a Section 27 release do so because they’ve been told they need funds quickly—typically to pay a deposit on another property they’ve already bought or intend to buy.

But this is where it becomes critical to stop and consider:

  • After the agent deducts their sales commission, how much of the deposit will actually remain?

  • Will the remaining funds be enough to meaningfully help with your next property purchase?

In many cases, the answer is no. Most vendors are left with a shortfall, and the remaining deposit funds are not enough to achieve their intended purpose.

The Better Alternative: Consider a Deposit Bond

If the purpose of requesting early access to the deposit is to fund the deposit on your next purchase, then in almost every case a deposit bond is a more suitable option.

Deposit bonds:

  • Can be arranged quickly (often within 24–48 hours)

  • Do not require upfront cash

  • Are accepted by most vendors and agents

  • Allow you to leave the current property’s deposit in trust where it belongs, protecting your interests

This avoids the complications of a Section 27 release and keeps the agent’s commission unpaid until the sale is complete—where it arguably should remain.

Why Agents Push So Hard

Real estate agents are usually paid out of the deposit once it's released. If no Section 27 is signed, they must wait until settlement—sometimes several weeks or months away.

This is why vendors often experience strong follow-up from agents asking for the release to be signed.

While it may be framed as something “helpful” or “standard,” vendors should recognise that the urgency typically has little to do with their benefit.

The agent’s primary goal is to get their commission paid as early as possible.

What Should You Do as a Vendor?

  • Think strategically. Ask whether early access to the deposit will truly help your cash flow—or whether most of it will disappear in agent fees.

  • Consider alternatives. Deposit bonds are often more efficient and avoid the need to give up control over your funds prematurely.

  • Ask who’s benefiting. If the deposit is being released early primarily to pay the agent, the request deserves careful scrutiny.

Final Word

At Victorian Property Settlements, we believe vendors should always understand what they are signing—and why.

A Section 27 deposit release might seem like a shortcut, but more often than not, it benefits the agent far more than it does the vendor. If you are facing cash flow restrictions or need to make a purchase before your sale settles, we strongly recommend considering a deposit bond as a better alternative.

We are always happy to talk through your options and help you make the most informed choice.