Should You Agree to a Section 27 Deposit Release?

Here's What Every Victorian Property Buyer Needs to Know

Buyers are often asked to release the deposit early under Section 27 of the Sale of Land Act 1962 (Vic). But here's the truth:

You are not obligated to agree – and in some cases, you absolutely shouldn't.

This guide explains what the vendor is asking, what risks are involved, and how to protect yourself.


What Is a Section 27 Statement?

Section 27 of the Sale of Land Act 1962 (Vic) allows a vendor to request the early release of the deposit before settlement. To do this, they must serve a "Section 27 Statement" containing:

  • Mortgage details

  • Outstanding loan amount

  • Confirmation of discharge or no objection from the lender

Important: You are not required to agree unless the statement satisfies the legal requirements, and even then, you may still object within 28 days.


Why Vendors Ask for Early Release

Vendors often want early access to the deposit because:

  • They need funds to pay off an existing loan

  • They are purchasing another property

  • They are trying to manage cashflow

But the real issue is: Is the title unencumbered and secure?

When Should You Consent to a Section 27 Deposit Release?

You may consider consenting when:

  • The Section 27 Statement is complete and correct

  • The title is unencumbered, or the lender has provided confirmation

  • You're confident the vendor is financially secure

  • Your legal or conveyancing adviser has reviewed and approved the release

When Should You Object?

If any of the following apply, you should object immediately:

  • The vendor has not provided a complete Section 27 Statement

  • The mortgage has not been discharged or remains high

  • The vendor is in financial distress or buying another property

  • The settlement is long or has a risk of delay

At Victorian Property Settlements, we advise our clients to be cautious. Once the money is released, it’s gone.


Your Rights as a Purchaser

Under the law:

  • You have 28 days to object to the release of deposit after receiving the Section 27 Statement

  • Your objection does not need to be justified if the vendor’s statement is insufficient

  • If the vendor doesn’t comply, the deposit must remain in trust until settlement

Our Advice: Wait Unless It's 100% Safe

“We always advise our clients to wait until the title is unencumbered or all finance is discharged before consenting to early release. It’s your deposit – protect it.”
— David Dawn, Licensed Conveyancer

Download: Your Section 27 Buyer Checklist

[ ] Was the statement served correctly?
[ ] Is the mortgage amount disclosed and low-risk?
[ ] Has the lender agreed to discharge the mortgage?
[ ] Is the settlement date confirmed and not likely to shift?
[ ] Have you received advice before consenting?

⭐ Download Our Free Checklist PDF

Still Not Sure? Get Professional Advice

Don’t feel pressured to release the deposit. A quick review can save you thousands in the event of a default or dispute.

📞 Contact Victorian Property Settlements for a Section 27 Review Today
Click here to book a review or call us on 03 9783 0111

Related Resources:

Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers.
Visit: www.victorianpropertysettlements.com.au