Off-the-Plan Deposit Protection Under Section 9AA

Section 9AA protects the deposit, not the whole project. It stops a buyer's deposit being treated like the developer's working capital before the new title exists.

That matters because off the plan buyers sign early. You might buy an apartment in Brunswick before the building is finished, a townhouse in Sunshine while the owners corporation plan is still being finalised, or a land lot in Wollert before the subdivision has registered. You pay a deposit now, yet settlement may be a long way off.

The core protections are straightforward:

The deposit cannot be more than 10% of the purchase price.
The deposit must be paid to the vendor's legal practitioner, conveyancer or licensed estate agent.
The money must be held on trust for the purchaser until registration of the plan of subdivision.
The contract must warn buyers that a substantial time may pass between signing and becoming the registered owner, and that the lot's value may change during that time.

When does section 9AA apply?

Section 9AA applies to an off the plan contract covered by the Sale of Land Act 1962 (Vic), usually where the buyer signs before the plan of subdivision has been registered. The protection applies automatically, so you don't need a special clause saying you have asked for it.

This is common for new apartments, townhouses, strata developments and staged land subdivisions. It can also arise in house and land arrangements where the land contract is signed before the new lot exists as its own title.

The building contract is different. If you're buying a house and land package, your land contract and building contract may be separate documents, with different deposit and payment rules. We've seen this catch buyers in growth suburbs where the sales office presents the land and build as one package, but the legal documents split the transaction into two deals. That doesn't mean anything is wrong, but it does mean you need to know which payment is protected as the land deposit.

Why can't my off the plan deposit be released early?

An off the plan deposit protected by section 9AA cannot be released early through the standard Victorian early release process. The deposit stays in the stakeholder account until the plan of subdivision is registered, unless the contract ends in a way that allows the money to be returned or dealt with.

For established homes, vendors sometimes use a Section 27 Sale of Land Act request to seek early release of the deposit before settlement. That process is mainly used where the contract is unconditional and the buyer has had enough information about the vendor's mortgage and title position.

Off the plan deposits are different. The developer is not meant to fund construction with your section 9AA deposit, even if the contract has become unconditional and settlement still feels certain. Think of it like a locked drawer: the money is there to show you are committed to the purchase, but it is not the developer's cash drawer.

What happens to my deposit while we wait for registration?

Your deposit sits in a trust account controlled by the stakeholder named in the contract. Neither you nor the developer can simply take it back because plans change, construction drags on, or the market shifts.

During the wait:

the developer cannot use the deposit for construction costs;
the money is not treated as the developer's ordinary business money;
interest is usually not paid to the buyer unless the contract says so;
settlement usually cannot happen until the plan is registered and the new title exists.

This wait can feel strange for first home buyers. You may have paid a deposit, organised finance, watched the building rise from the tram stop, and still not be able to settle because the title process is not finished. Our guide to off the plan settlement explains how the Statement of Compliance and plan registration steps fit into that final stage.

If the developer's company gets into financial trouble before registration, the trust structure is one of your key protections. The deposit should not be swept into the developer's general pool of assets, because trust money is held for the purchaser.

What if the developer asks for more than 10%?

A request for more than 10% should be treated as a red flag. Section 9AA says the deposit must not exceed 10% of the purchase price of the lot.

Watch for language that tries to soften the issue. The extra amount may be described as a top up, holding payment, fit out payment, design selection fee or contribution. Labels don't decide the answer. If the payment is really part of the deposit for the off the plan lot, it needs careful review.

There can be legitimate payments outside the land deposit, such as a separate building contract payment or an agreed upgrade package. The question is what the money is for, who holds it, when it becomes payable and what happens if the plan doesn't register.

Before signing, ask your conveyancer to check:

the total deposit percentage;
who receives the money;
whether any amount goes directly to the developer;
whether the contract tries to release funds before registration;
whether side agreements or upgrade invoices change the risk.

What happens if the plan never registers?

If the plan is not registered by the date allowed in the contract, the buyer may have a right to rescind and recover the deposit. If the contract does not state a date, Victorian law gives a default 18 month period.

This is where sunset clauses matter. A sunset clause sets the deadline for a key event, often registration of the plan of subdivision or issue of an occupancy permit. If the deadline passes, the clause may allow the contract to be ended.

For buyers, this can be a safety valve. It stops you being tied to an unfinished project forever. If your lender will not keep extending approval, your family plans have changed, or the project has stalled, the sunset date may be the point where you can step back and ask for the deposit to be returned.

Developers do not have the same freedom to walk away. Since Victorian reforms, a developer generally cannot rescind a residential off the plan contract under a sunset clause unless the buyer gives written consent or the Supreme Court of Victoria permits it. The buyer must be told why the developer wants to rescind, and the buyer does not have to consent.

How does section 9AA fit with other off the plan protections?

Section 9AA is only one part of the Victorian off the plan safety net. It protects the deposit, while other rules deal with disclosure, plan changes, tax concessions and delay.

Key protections to check include:

Section 32 vendor statement: the vendor must provide a signed disclosure statement before you sign the contract.
Plan change rights: if the plan changes after signing and the change materially affects your lot, you may have rights to rescind.
Sunset clause protections: the contract should state what happens if registration or completion is delayed.
Deposit release wording: the contract should not let section 9AA money go to the developer early.
Duty concessions: the off the plan duty concession may reduce land transfer duty where eligibility rules are met.

The duty rules deserve a separate look before signing. For contracts signed on or after 21 October 2024 and before 21 October 2026, Victoria has a temporary concession for eligible strata apartments, units and townhouses, with no property value threshold. It can apply to investors, companies and trusts, not only owner occupiers, but house and land packages outside strata are treated differently.

First home buyers may also qualify for duty relief where the dutiable value is up to $600,000, with a concession from $600,001 to $750,000. For off the plan purchases, the off the plan concession may reduce the dutiable value first, which can change the result. Get the numbers checked before relying on a sales estimate.

What should Melbourne buyers check before paying an off the plan deposit?

Before paying, check the deposit clause against the contract, not just the agent's email. A polished sales brochure is not the document that protects you.

Use this quick check:

Is the deposit 10% or less of the purchase price?
Is it paid to the vendor's legal practitioner, conveyancer or licensed estate agent?
Does the contract say the money is held on trust until plan registration?
Does any special condition allow early release or developer access?
Is the sunset date clear?
Are there separate building, upgrade or design payments sitting outside the land deposit?

If any answer feels unclear, pause before transferring funds. A short contract review now can prevent a long, stressful fight later.

Frequently asked questions

What is section 9AA of the Sale of Land Act?

Section 9AA of the Sale of Land Act 1962 (Vic) protects off the plan deposits in Victoria. It caps the deposit at 10% of the purchase price and requires the deposit to be paid to the vendor's legal practitioner, conveyancer or licensed estate agent, then held on trust for the purchaser until the plan of subdivision is registered. The protection applies by law and cannot be avoided by a special condition.

Can a developer release my off the plan deposit early in Victoria?

No. A developer cannot use the standard section 27 early release process to access a section 9AA off the plan deposit before the plan of subdivision is registered. The deposit must remain in the stakeholder trust account unless the contract ends or the law allows another outcome. Any clause that tries to give the developer early access should be checked before you sign.

Is the 10% off the plan deposit cap a hard limit?

Yes. Section 9AA caps the deposit at 10% of the purchase price of the lot. If a contract or side arrangement asks for more, the wording needs careful review, especially where an extra payment is described as a top up, reservation fee, fit out fee or design fee. Some separate building or upgrade payments may be different, so the substance of the payment matters.

What happens to my off the plan deposit if the developer goes broke?

Your section 9AA deposit should be held in trust for you, not treated as the developer's ordinary business money. If the developer is wound up before registration, the deposit should not form part of the developer's general assets. You may still need advice about terminating the contract and recovering the money, but the trust structure is designed to protect the cash from the developer's creditors.

What is a sunset clause in an off the plan contract?

A sunset clause sets the date by which a key event must occur, often registration of the plan of subdivision or issue of an occupancy permit. If the date passes, the buyer may have a right to rescind and recover the deposit, depending on the contract and the Sale of Land Act. In Victoria, a developer generally cannot rescind a residential off the plan contract under a sunset clause without the buyer's written consent or a Supreme Court order.

Can I use a deposit bond instead of cash for an off the plan property?

Yes, deposit bonds are often used in off the plan purchases because settlement may be many months away. A deposit bond is a guarantee, usually issued by an insurer, that can pay the vendor if the buyer defaults. The vendor must agree to accept it, so it should be negotiated and written into the contract before signing.

Does section 9AA apply to house and land packages?

It depends on how the deal is structured. If the land contract is off the plan because the plan of subdivision has not registered, section 9AA may protect the land deposit. The building contract is usually a separate domestic building contract with different payment rules, so both documents should be reviewed together.

About the Pearson Chambers Conveyancing team

Pearson Chambers Conveyancing is a Melbourne focused conveyancing team that works with first home buyers, off the plan purchasers and house and land buyers across Victoria. We help clients understand contracts, Section 32 statements, subdivision documents, owners corporation papers and settlement steps in plain English. Section 9AA deposit protection is part of the day to day work we do when reviewing off the plan contracts before buyers sign.

Sources we consulted

Get help reviewing your off the plan contract before you sign

If you're about to sign an off the plan contract for a Melbourne apartment, townhouse, unit or house and land package, have the deposit clause checked before you transfer funds. Pearson Chambers Conveyancing offers a complimentary Section 32 vendor statement contract review, including the section 9AA deposit structure, sunset clause and stakeholder wording.

Email: contact@pearsonchambers.com.au

General information only, current as at the date of publication. Victorian conveyancing rules and legislation change frequently. Please contact the Pearson Chambers Conveyancing team for advice on your specific contract.