Useful Tips

Section 27 – Early release of deposit

This is intended only as a general guide to understanding this topic. Contact us to discuss your individual circumstances.

Definition
In certain circumstances, the deposit paid by a property purchaser can be released to the vendor prior to the sale settlement.

If there is no request for early release, the deposit remains in a Solicitor or Real Estate Agent trust account with no interest earnings.

Before you rely on early released deposit, discuss your unique position and requirements with your sale conveyancer or solicitor.

Benefits
You could use the deposit paid on your sold property towards your deposit on a new one.
If you have a long sale settlement, taking the deposit out of the trust account and either paying down your loan or putting it into a deposit earning account may be financially worthwhile.
If you have a simultaneous sale & purchase settlement you may require these deposit funds towards your purchase.

Disadvantages
It is never guaranteed that the early release will occur prior to settlement.
It can take quite a while to undertake the administration, obtain the information and required authorisations.

Things to consider
The process:
The contract of sale must be unconditional.
The vendor obtains details of any mortgage or caveat over the property in writing from the vendor’s lender.
The amount owing on any outstanding loans must not exceed 80% of the sale price. Some loans with redraw or lines of credit can make it very difficult to determine exactly how much the vendor will owe on the mortgage at the time of the settlement.
The vendor provides a Section 27 statement, including mortgage and caveat details to the purchaser.
The purchaser signs and returns the agreement to the vendor.
The vendor’s conveyancer or solicitor advises the holder of the Trust account of the completed Section 27.
The Real Estate agent will retain/be paid their commission and any other expenses they are entitled to, with the balance being paid to the vendor.
The holder of the Trust account releases the remainder of the funds to the vendor. Due to the time it can take, do not do consider an early release if the sale settlement is less than 30 days.