Section 27 Deposit Release in Victoria – What Buyers and Sellers Must Know
/What Is a Section 27 Statement?
Under Section 27 of the Sale of Land Act 1962 (Vic), a vendor can request early release of the deposit money held in trust before settlement. This is done by serving a Section 27 statement to the purchaser, disclosing:
Whether any mortgages remain on the property
Whether the property is under finance
Confirmation that the vendor is not in default of any obligations
Once served, the purchaser has 28 days to object. If no objection is made within that timeframe, the deposit may be released to the vendor.
What Are the Buyer’s Rights?
As a purchaser, you are not obliged to agree to the release. The law provides time to:
Review the vendor’s disclosure
Verify the lender’s statement (if a mortgage exists)
Raise valid objections—such as inconsistencies or ongoing finance
If you object in writing within the 28 days, the deposit remains in trust until settlement.
Common Issues and Risks
At Victorian Property Settlements, we often caution purchasers about:
Incomplete mortgage discharge statements
Vendor’s failure to disclose arrears or caveats
Section 27 statements served late (e.g. just before settlement)
Sellers sometimes request early release even during a 30-day contract—giving purchasers only days to respond. In such cases, we generally advise clients that the risk outweighs the benefit, especially when settlement is already close.
Our Professional Position on Section 27 Releases
Drawing on decades of experience, David Dawn, Licensed Conveyancer at Victorian Property Settlements, explains:
“While the law provides a mechanism for early deposit release, it is not automatic. The deposit belongs to the purchaser until settlement, and we generally advise our clients to retain control of it unless there is a compelling reason not to.”
We always recommend:
Waiting until the 28-day period has passed
Requesting full documentation before consenting
Considering your leverage—if issues arise later, holding the deposit may help resolve disputes
For Vendors and Agents
If you’re a vendor or real estate agent:
Ensure the statement is prepared early in the contract process
Disclose all mortgage details accurately
Understand that no means no—a buyer can object without giving a reason
Encouraging deposit release too forcefully may appear coercive and cause unnecessary tension with the buyer.
Can It Be Contested Later?
Yes. If the purchaser signs a Section 27 statement but later discovers material non-disclosure, they may:
Withhold settlement
Lodge a complaint with Consumer Affairs
Seek legal action under misrepresentation laws
This underscores why accuracy and honesty in the statement are critical.
Final Word
The deposit isn’t just money—it’s leverage, security, and trust. Don’t let it go without clear, verified disclosure. And never assume a Section 27 statement means automatic release.
Need Help Reviewing a Section 27 Statement?
Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers.
📍 Based in Frankston, serving all of Victoria
📞 03 9783 0111 | ✉️ david@quick32.com
🌐 www.victorianpropertysettlements.com.au