If you are selling a property in Victoria, you may hear your conveyancer or real estate agent mention a Section 27 Statement.
You may also be asked:
“Would you like to release the buyer’s deposit before settlement?”
For many sellers, this can be confusing.
The deposit is normally held in trust until settlement. However, Victorian law provides a process that can allow the deposit to be released to the seller before settlement if the relevant requirements are satisfied.
This process is commonly referred to as a Section 27 deposit release.
In this article, we explain what a Section 27 Statement is, why it is used, what information is required and what sellers should know before requesting early release of the deposit.
What is a Section 27 Statement?
A Section 27 Statement is a written statement provided by the seller to the buyer in connection with a request for the early release of the deposit.
Section 27 of the Sale of Land Act 1962 (Vic) deals with the circumstances in which a purchaser can authorise the release of deposit money to the seller before settlement.
The purpose of the Section 27 process is to give the buyer information about matters affecting the property, particularly mortgages and caveats, so the buyer can decide whether the deposit can be released before settlement.
This is different from a Section 32 Vendor Statement.
Section 27 vs Section 32
The two are sometimes confused because both are associated with Victorian property sales.
- Is provided before the buyer signs the contract.
- Contains prescribed information about the property.
- Deals with matters such as title, mortgages, easements, covenants, zoning and outgoings.
Section 27 Statement
- Is generally dealt with after the contract has been signed.
- Relates to the proposed early release of the buyer’s deposit.
- Provides information relevant to the buyer’s decision about releasing the deposit before settlement.
Your conveyancer can explain which documents are required for your particular transaction.
Why would a seller want the deposit released early?
The deposit can be a substantial amount of money.
For example, if a property sells for $800,000 and the deposit is 10%, the deposit would be $80,000.
A seller may want access to those funds before settlement for a number of reasons.
For example, the seller may want to:
- Pay the deposit on another property
- Help fund their next purchase
- Pay down a loan
- Meet other financial commitments
- Use the funds for another investment
- Access equity created by the sale
However, sellers should not assume that the deposit will automatically be released early.
The legal requirements must first be satisfied.
Is the deposit normally held until settlement?
Yes.
The deposit is generally held in trust by the selling agent, conveyancer or legal practitioner until it can properly be released.
Consumer Affairs Victoria states that where an agent is managing the sale, the deposit is generally held in the agent’s trust account until settlement or transferred to the seller’s conveyancer or legal practitioner’s trust account.
The deposit is not normally money that the seller can simply access immediately after the contract is signed.
When can a deposit be released under Section 27?
There are specific requirements that need to be satisfied before early release can occur.
Broadly, the process requires:
- The contract must be unconditional.
- The buyer must have accepted, or be deemed to have accepted, the seller’s title.
- The seller must provide the required information concerning mortgages and caveats affecting the property.
- The buyer must be satisfied with the relevant information and provide the required authorisation or otherwise be deemed to have authorised release in accordance with the legislation.
- The statutory waiting period must be satisfied.
Consumer Affairs Victoria states that the contract must be unconditional, the buyer must be satisfied with the seller’s proof of debts information, and the deposit cannot be released until at least 28 days after the contract was signed.
Because Section 27 is a statutory process, the exact requirements should be checked for each transaction rather than assuming that every deposit can be released early.
What information does a seller need to provide?
The Section 27 process is particularly concerned with financial interests affecting the property.
If there is a mortgage over the property, information about the mortgage needs to be provided.
The buyer needs enough information to assess whether the sale price is sufficient to deal with the secured debt.
The process can also require information about caveats affecting the property.
This is important because the buyer is being asked to allow the deposit to be released before the buyer has received the property and before settlement has occurred.
The information provided therefore needs to be accurate.
What if there is a mortgage over the property?
Having a mortgage does not automatically prevent a seller from requesting early release of the deposit.
However, the mortgage becomes particularly important.
The seller needs to provide the required information about the mortgage so the buyer can assess the position.
Consumer Affairs Victoria states that, for early release, the seller must provide evidence satisfactory to the buyer that either:
- there are no debts secured against the property; or
- the total amount of debts secured against the property does not exceed 80% of the sale price.
For example, if a property sells for $800,000, 80% of the sale price is $640,000.
If the relevant secured debts exceed the applicable threshold, early release may not be available under the usual Section 27 process.
This is one reason sellers should provide accurate and up-to-date mortgage information to their conveyancer.
What is proof of debts information?
“Proof of debts information” is information provided by the seller to the buyer to support a request for early release of the deposit.
Consumer Affairs Victoria describes it as information showing whether there are debts secured against the property and, where there are debts, whether the total secured debt falls within the applicable limit.
If you have a mortgage, your conveyancer may need information from your lender to properly deal with the Section 27 process.
It is therefore important to start the mortgage discharge process early.
What if there is a caveat on the title?
A caveat can affect the Section 27 process.
A caveat is a legal interest or claim recorded on the title that may prevent certain dealings with the property without addressing the caveat.
The Section 27 process requires relevant information about caveats affecting the property to be disclosed.
If there is a caveat, tell your conveyancer as early as possible.
Do not assume that a caveat can simply be ignored because the property is being sold.
Does the buyer have to agree to early release?
The seller cannot simply demand that the deposit be released before settlement.
The Section 27 process gives the buyer information so the buyer can consider the request.
If the buyer is not satisfied with the relevant information or there is another issue preventing release, the deposit may remain in trust until settlement or until the issue is otherwise resolved.
This means sellers should not make financial commitments based on receiving the deposit early unless the release has actually been confirmed.
What is the 28-day period?
The 28-day period is an important part of the Section 27 process.
The deposit cannot simply be released immediately after the Section 27 Statement is provided.
Consumer Affairs Victoria states that the buyer cannot release the deposit until at least 28 days after the contract was signed.
There are also statutory requirements concerning the information provided to the buyer and the buyer’s response.
Because the timing can be important, your conveyancer should manage the Section 27 process carefully.
Does Section 27 mean the property has settled?
No.
This is an important distinction.
Early release of the deposit is not settlement.
If the deposit is released early:
- The contract still continues.
- The property has not yet settled.
- The buyer has not yet paid the remaining settlement funds.
- Ownership has not transferred simply because the deposit was released.
- The agreed settlement date still applies.
The deposit is only one part of the purchase price.
For example:
Purchase price: $800,000
Deposit: $80,000
Balance at settlement: $720,000
If the $80,000 deposit is released early, the buyer still needs to complete settlement and pay the balance of the purchase price, subject to the contract and settlement adjustments.
Can a seller use the early-released deposit to buy another property?
Potentially, yes, if the deposit has been validly released.
This is one of the common reasons sellers request early release.
For example, a seller may be:
Selling existing property → receiving early deposit → using funds toward next purchase
However, sellers should be careful about relying on early release.
If the deposit has not yet been released, it should not be treated as available funds.
Even after early release, the seller should continue to ensure that they have sufficient funds to meet their obligations and complete their sale.
What happens if the buyer does not agree to release the deposit?
If the buyer does not agree to early release, the seller generally cannot simply force the deposit to be paid to them.
The deposit may remain held until settlement, subject to the contract and applicable law.
This is why a seller should not assume that a Section 27 request guarantees access to the deposit.
If early release is important to you, tell your conveyancer as early as possible.
Can the buyer refuse a Section 27 release?
The buyer has protections under the Section 27 process.
The buyer is being asked to allow money that they have already paid to be released to the seller before settlement.
The buyer therefore needs to be satisfied with the information provided and the requirements for release.
If there is an issue with the seller’s mortgage information, caveat information, title or other relevant requirements, the buyer may not be prepared to authorise the release.
The buyer should obtain their own legal or conveyancing advice if they are unsure about a Section 27 request.
What happens if the Section 27 information is incorrect?
Accuracy is extremely important.
If the seller provides incorrect or incomplete information, this may cause problems with the deposit release process and potentially create legal issues.
Examples could include:
- Incorrect mortgage information
- Failing to disclose a caveat
- Incorrect secured debt information
- Out-of-date lender information
- Incomplete information about interests affecting the property
Sellers should provide all relevant information to their conveyancer and tell them promptly if anything changes.
What if I have already arranged a mortgage discharge?
This can help with the overall settlement process, but it does not automatically mean that the deposit can be released.
The Section 27 requirements still need to be satisfied.
Your lender’s discharge process and the Section 27 deposit-release process are related to the sale but are not the same thing.
The mortgage discharge deals with removing the lender’s security at settlement.
Section 27 deals with the possible early release of the buyer’s deposit.
What if my mortgage is more than 80% of the sale price?
This is an important situation to identify early.
If the secured debts exceed the applicable 80% threshold, the normal Section 27 early-release process may not be available.
For example:
Sale price: $600,000
Secured debt: $500,000
80% of $600,000 is $480,000.
The secured debt of $500,000 is above that amount.
In this situation, the seller should speak with their conveyancer and lender about the position rather than assuming that the deposit can be released.
What if there is no mortgage?
A property without a mortgage may have a simpler Section 27 process.
However, the absence of a mortgage does not automatically mean that the deposit can be released immediately.
The other Section 27 requirements still need to be considered, including the contractual position, title and any caveats or other relevant matters.
Should every seller request early release of the deposit?
Not necessarily.
Early release can be useful, particularly when the seller needs funds for another purchase.
However, it is not compulsory.
Some sellers are perfectly comfortable leaving the deposit in trust until settlement.
Whether early release is appropriate depends on your circumstances and the requirements of the particular transaction.
Your conveyancer can explain the process and what is required.
What should sellers do if they want early release?
If you want to explore early release of the deposit, tell your conveyancer as soon as possible.
You should:
- Tell your conveyancer that you want to consider early release.
- Provide details of all mortgages and secured debts.
- Tell your conveyancer about any caveats or other interests affecting the property.
- Provide any lender information requested.
- Make sure the contract is unconditional before relying on early release.
- Allow sufficient time for the Section 27 process.
- Do not spend or commit the deposit before the release has actually occurred.
- Keep your conveyancer informed of any changes affecting the property or loan.
Section 27 and selling a property with a mortgage
If you are selling a property with an existing mortgage, Section 27 is particularly relevant.
Your lender will need to provide information about the mortgage and the amount required to discharge it.
The sale proceeds must ultimately be sufficient to deal with the mortgage and other settlement requirements.
You can read more about this in our article:
Selling a Property With a Mortgage in Victoria: What Sellers Need to Know
Section 27 vs settlement
It is useful to remember the difference:
Section 27
Potentially allows the seller to receive the buyer’s deposit before settlement.
Settlement
Completes the property transaction, with the buyer paying the balance of the purchase price and the transfer of ownership being completed.
A Section 27 release does not replace settlement.
Frequently Asked Questions
What is a Section 27 Statement?
A Section 27 Statement is a statutory notice used in connection with the early release of a buyer’s deposit before settlement in Victoria.
Is Section 27 compulsory?
No. A seller does not have to request early release of the deposit.
Can I get my deposit before settlement?
Possibly. The statutory requirements for early release must be satisfied, and the buyer must provide the required authorisation or the release must otherwise occur in accordance with the applicable provisions.
How long does Section 27 take?
The timing depends on the transaction and when the required information is provided. A statutory 28-day period is important to the process, so sellers should not leave it until the last minute.
Can I get the deposit if I still have a mortgage?
Possibly. However, the mortgage and secured debt information must satisfy the relevant requirements. Consumer Affairs Victoria states that the secured debts must not exceed 80% of the sale price for the early-release process.
What if there is a caveat on my property?
Tell your conveyancer immediately. Caveats need to be considered as part of the Section 27 process.
Does early release mean settlement has occurred?
No. Settlement still needs to take place on the agreed settlement date.
Can I use the deposit to pay the deposit on my next property?
If the deposit has been validly released, you may be able to use the funds for your next purchase. However, you should not commit to using the money until you know the Section 27 release will actually occur.
Can the buyer refuse early release?
The buyer has rights under the Section 27 process and must be satisfied with the relevant information before providing the required authorisation. If the requirements are not satisfied, the deposit may remain in trust.
Should I arrange Section 27 before settlement?
If you want early access to the deposit, you should tell your conveyancer as early as possible. Waiting until shortly before settlement may leave insufficient time to complete the process.
How Prox Conveyancing Can Help
At Prox Conveyancing, we assist Victorian sellers with their conveyancing from contract through to settlement.
If you are considering early release of the buyer’s deposit, we can assist with the conveyancing requirements and coordinate the relevant information with the parties involved.
We can help with:
- Reviewing the Contract of Sale and Section 32
- Preparing and managing the Section 27 process
- Reviewing mortgage information
- Coordinating with your lender
- Considering caveats and title matters
- Communicating with the buyer’s conveyancer or solicitor
- Coordinating with the selling agent
- Managing settlement requirements
- Arranging electronic settlement
- Confirming completion of the sale
If you are selling a Victorian property and would like to know whether early release of the deposit may be available, speak with your conveyancer as early as possible.
About the Author
Meet Sally
Sally Kwok is a Licensed Conveyancer and the Director of Prox Conveyancing. With more than 16 years of experience in the conveyancing industry, she is committed to helping buyers and sellers navigate Victorian property transactions with confidence. Sally is passionate about providing clear communication, practical guidance and personalised service throughout every stage of the conveyancing process.
👉 Learn more about Sally on our About page.
About Prox Conveyancing
Prox Conveyancing is a Victorian conveyancing practice providing professional conveyancing services for residential property transactions across Victoria. We assist buyers, sellers, investors and families with a wide range of conveyancing matters, delivering personalised service, transparent communication and professional support from contract through to settlement.
👉 Learn more about Prox Conveyancing on our About page.
This article provides general information only and is not legal advice. Every property transaction is unique, and the information above may not apply to your particular circumstances. If you require advice about your specific situation, please contact a qualified legal professional or licensed conveyancer.