Investing in a property or selling your family home can both an exciting and stressful time. When buying and selling, there are a lot of terms that get thrown around and it’s important to be aware of what they all mean and how they can impact the whole process. At Robert Wood and Associates, our Melbourne conveyancing lawyers are commonly asked about the Section 27, so here we will take a deeper look at what it is and how the process works.
The Deposit
When a buyer enters into an agreement to purchase a property they are required to pay a deposit upfront, which is usually 10% of the sale price. The deposit funds are held by a real estate agent, property lawyer or conveyancer in a trust account until the sale is final. At settlement, the balance of the purchase price must be paid to the vendor, and the deposit is also released from the trust. Generally, the seller can’t access the deposit until the property has settled. However, sometimes the seller needs the money earlier, often to purchase another property or to make an investment. In this case, the seller can fill out and submit a Section 27 statement.
What is a Section 27?
In Victoria, a Section 27 statement is also known as an Early Release of Deposit Authority. Under Section 27 of the Sale of Land Act 1962, a seller can ask for their deposit to be released before settlement. This is done submitting additional paperwork which asks the buyer for permission for the deposit to be accessed early. As the buyer must agree, there is no automatic guarantee that the vendor will be able to have early access the deposit funds.
What is the Process?
First, the vendor must make a request in writing for early release of deposit via the Section 27. The request must include details regarding any monies owed on the property, including mortgages and caveats. The purchaser can then sign the Section 27, allowing permission for the funds to be released. It’s important to note that it is the buyer’s legal obligation to agree to a Section 27, unless they have valid reason to reject it. If they have a valid reason, it must be given in writing and within 28 days of receiving the request.
How Long Will It Take to Release the Deposit?
From the day they receive the section 27 statement, the buyer has 28 days to either agree or object to it. If they agree to it, the Section 27 can be signed immediately and the deposit can be released soon after.
If the buyer has an objection to the request, they will need to state their reason. The seller can either accept the objection and wait until settlement to receive the money or try and address the reasons with the buyer in the hopes they will change their mind. In this case, it could take weeks, especially if the seller needs to get more information from their bank or lender.
The law states that if the buyer doesn’t agree or disagree, it’s assumed that they have consented to the early release. Therefore, if the buyer doesn’t respond to the Section 27 within the stipulated 28-day timeframe, the seller is granted access the deposit.
If you have sold a property and want to get access to your deposit early, it’s a good idea to speak to your property lawyer and work with them to prepare the paperwork correctly. This will give you the best chance of getting the buyer to agree.
Need a Property Lawyer in the Eastern Suburbs of Melbourne?
If you need assistance with a section 27 or any other conveyancing matters, get in touch with Robert Wood and Associates today. Our conveyancing lawyers have been helping Melbourne homebuyers with the legalities associated with real estate transactions for over 40 years. Make an appointment by calling (03) 9762 3877 or send us an enquiry online now.
