In Victoria, the Sale of Land Act 1962 (Act) allows for the early release of a buyer's deposit to the seller before settlement under Section 27. Here’s how it works:
- Contract Conditions: The contract must not have any ongoing conditions benefiting the buyer, such as finance or inspection clauses.
- Vendor’s Section 27 Statement: The seller provides a statement detailing any existing mortgages or caveats on the property title.
- Buyer’s Review: The buyer reviews this statement to ensure accuracy and confirms that the purchase price will cover all outstanding mortgages.
- If satisfied, and without any objections within 28 days, the deposit is released to the seller. If the buyer objects with valid reasons, the deposit remains in trust until settlement.
Under what circumstances can a deposit be released to the seller before settlement under the Sale of Land Act 1962 (Victoria)?
The Sale of Land Act 1962 (Act) requires that the deposit paid by the buyer must be held in trust on behalf of both parties until settlement. However, if certain prerequisites are satisfied, section 27 of the Act provides for the release of the deposit to the seller before settlement.
The prerequisites include:
- the contract is not subject to any conditions ensuring for the benefit of the buyer (such as finance or building and pest inspection conditions);
- the seller needs to provide a statement outlining particulars of any existing mortgage or caveat encumbering the title to the property; and
- the buyer is satisfied with the accuracy of these particulars and is satisfied that the purchase price is sufficient to discharge all mortgages over the property (e.g. the amount required to discharge the mortgages over the property, being the payout figure does not exceed 80% of the purchase price).
If the buyer is not satisfied with any particulars above, they have 28 days after their receipt of these particulars to serve a written notice objecting to the pre-settlement release of the deposit. The notice needs to state the reasons why you are not satisfied with these particulars.
If the buyer does not provide a valid objection to the early release of the deposit, when the28-day period lapses, the buyer is deemed to have been satisfied with the particulars provided and is deemed to have authorised the pre-settlement release of deposit to the seller.
