What Real Estate Agents Don’t Want You to Know About Section 27 Deposit Releases
/What Real Estate Agents Don’t Want You to Know About Section 27 Deposit Releases
As explained by David Dawn, Licensed Conveyancer at Victorian Property Settlements, there’s often more going on behind the scenes than clients are told when it comes to a Section 27 deposit release. If you’re being pressured to sign, pause and ask: Who really benefits?
What Is a Section 27 Deposit Release?
Section 27 of the Sale of Land Act 1962 (Vic) allows the vendor (seller) to request early access to the deposit held in trust, before settlement. To do so, the vendor must provide a Section 27 Statement with details of their mortgage and confirm there are no caveats or financial encumbrances that would prevent release. The purchaser can consent or object based on legal grounds.
Why Agents Push So Hard: The Commission Catch
Here’s the part you may not be told: in many real estate agency agreements, the agent is entitled to their commission once the vendor accesses the deposit. That means early release isn’t just about the vendor getting funds sooner—it can also trigger the agent’s payday. This isn’t always disclosed clearly, if at all.
So when your agent insists, "it’s totally standard" or "everyone signs it," remember: they may have thousands of dollars riding on your decision.
For Sellers: What You Need to Know
As a vendor, early access to the deposit might sound appealing—especially if you need the funds for another purchase or to pay down debt. But:
It’s not automatic – You must provide proper documentation under Section 27, and the buyer can object.
It may trigger the agent’s commission – You could be paying your agent well before you have full control over the sale proceeds.
You’re still on the hook if settlement fails – If the buyer defaults, you may have spent money (including on the agent) that you can’t easily recover.
Before you agree, talk to your conveyancer—not just your agent.
For Buyers: Think Twice Before Consenting
Buyers are often told early deposit release is "routine," but it can carry real risks:
You lose leverage – The deposit is often your strongest tool to ensure the vendor meets their obligations before settlement.
You may not have the full financial picture – If the Section 27 Statement is incomplete or misleading, your consent could be a costly mistake.
There is no legal obligation to agree – Don’t let the agent tell you otherwise.
Purchasers should always get independent advice before signing anything related to a Section 27.
Final Word: Follow the Money
When it comes to property deals, always ask: who benefits from this? In the case of Section 27 deposit releases, the answer often includes the real estate agent. That’s not inherently wrong—but it’s something every buyer and seller deserves to know.
For personalised advice on deposit releases or any conveyancing issue, contact:
Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers
Visit: www.victorianpropertysettlements.com.au