Section 27 Sale of Land Act

Picture this: you have just sold your Brunswick cottage for a tidy sum, but the settlement date is still three months away and your removalist wants a deposit tomorrow. The money that could pay that bill is sitting in trust, seemingly out of reach. Enter Section 27 of the Sale of Land Act 1962 a small but mighty provision that, when handled well, can free up your deposit cash long before settlement. In this guide we will walk through the nuts and bolts of a Section 27 notice, debunk a few myths, and share real world tips that buyers and sellers across Melbourne can put to use straight away.

Why the Deposit is Normally Locked Away

When a property contract goes unconditional, the buyer pays a deposit usually ten per cent of the agreed price. By law that money must sit in a stakeholder's trust account until settlement. Locking the funds away protects:

• Buyers, who need assurance that the vendor's creditors cannot seize the money if something goes wrong; and
• Vendors, who know the buyer is financially committed to complete the purchase.

The trust arrangement is simple, but it can cause real cash-flow pain for vendors who need bridge finance, or who are trying to secure their next home before settlement day.

What Exactly is a Section 27 Notice?

Section 27 allows a vendor to serve a written notice on the purchaser requesting the early release of the deposit. The notice must state:

• whether the property is mortgaged and, if so, the current payout figure;
• confirmation that the loan is not in default;
• details of any caveats or charges on title; and
• confirmation that all conditions precedent in the contract have been satisfied.

The buyer then has 28 days to object. Silence counts as consent. Provided there are no valid objections, the stakeholder usually the estate agent can release the funds to the vendor after the 28-day window closes.

Four Cornerstones for a Valid Early Release

1. Unconditional contract. All finance, building, pest, or due diligence clauses must be satisfied or waived.
2. Full disclosure. The vendor must provide a mortgagee letter showing the outstanding loan balance.
3. Safe equity buffer. The mortgage must not exceed 80 per cent of the sale price. If the LVR sits higher, the purchaser gains an automatic right to object.
4. Twenty eight days' notice. Even if both parties agree verbally, the clock cannot be shortened under Victorian law.

Grounds for a Purchaser to Object

Purchasers often assume they must sign off, but the law firmly protects them. Valid written objections include:

• outstanding loan balance above 80 per cent of the sale price;
• existing loan in default or lender refuses to issue confirmation;
• a caveat or owners corporation charge appears on the title search;
• contract is still subject to a purchaser condition such as finance approval; or
• any information in the Section 27 statement is inaccurate or incomplete.

Why Vendors Like Early Release

Bridging cash flow. Melbourne's median dwelling value recently topped the $950,000 mark, and lenders have tightened credit buffers in 2025. Accessing a $95,000 deposit can avoid high-interest bridging finance.

Smoother moves. Selling and buying close together often means paying two mortgages at once or footing renovation bills before settlement. Early release can cover trades, staging, and moving costs.

Psychological relief. There is nothing like seeing cleared funds in your account to confirm that the sale is on track.

Why Some Buyers Still Agree

Signing off is optional, yet there are occasions where it helps the buyer too:

• Bargaining chip. In exchange for consent, a purchaser can negotiate early access to measure rooms, minor repairs, or a flexible settlement date.
• Goodwill. A cooperative vendor, freed from cash stress, is less likely to quibble over settlement adjustments.
• Market conditions. In a competitive market, buyers sometimes volunteer early release consent to strengthen their offer.

Melbourne Property Market Snapshot Mid 2025

The Reserve Bank's May rate rise pushed variable mortgages to an average 6.35 per cent. Auction clearance rates have cooled slightly, yet family homes within ten kilometres of the CBD still command brisk competition. These dynamics have made early release deposits more common, as vendors try to secure their next purchase before further rate hikes bite.

Case Study: The Collingwood Terrace

Emma and Tom owned a two bedroom worker's cottage in Collingwood, listed for $1.2 million. They had already signed a contract to buy a larger house in Preston and needed $60,000 to cover stamp duty within thirty days. Their Collingwood buyer agreed to a Section 27 release after:

• receiving the mortgagee letter showing a balance of only $350,000 (29 per cent LVR);
• confirming the contract was unconditional; and
• negotiating an early access arrangement so she could begin minor landscaping before settlement.

The 28 day period elapsed without objection, the deposit was released, and both settlements proceeded smoothly. Emma and Tom avoided a bridging loan that would have cost nearly $4,000 in interest.

Common Myths Debunked

"The estate agent says I must sign." You are never obliged to sign. Silence is enough.

"We can shorten the 28 day wait if we all agree." The statute is crystal clear no private agreement can trim the notice period.

"Once the money is released, the buyer loses all protection." Incorrect. A buyer who suffers loss from vendor default can still sue and lodge a caveat.

Frequently Asked Questions

Can the vendor spend the deposit straight away? Yes, once the stakeholder transfers the money it is the vendor's to use, but if the sale collapses through the vendor's fault they must repay it.

What happens if I object on the 29th day? Your objection will be too late. Put any concerns in writing well before the deadline and keep proof of delivery.

Does Section 27 apply to off the plan contracts? Technically yes, but many off the plan buyers retain the right to rescind if the plan is not registered on time, so early release is rare and most lenders decline to give comfort letters so early in the build.

How long does the stakeholder hold the money if the buyer objects? Until settlement or until the objection is resolved, whichever comes first.

Can I refuse for any reason at all? Yes, you do not need to provide grounds, but withholding consent without reason may sour negotiations. If you have legitimate concerns, raise them early.

Practical Tips for 2025 Buyers and Sellers

Sellers:

• Request your discharge statement early banks often take up to ten working days and charge an admin fee.
• Confirm the buyer's solicitor has received the Section 27 the same day it is served so the 28 day clock starts ticking.
• Avoid overselling: one inaccurate figure in the statement can derail the release.

Buyers:

• Forward the statement to your conveyancer or solicitor immediately.
• If you need more time to investigate title issues in apartment blocks, for instance lodge a "holding objection" so the deposit remains in trust while searches finish.
• Where the vendor's equity position is healthy, think about what you might gain in exchange for consent an inclusion, a timing tweak, or even a modest price adjustment.

How Pearson Chambers Conveyancing Can Help

Every property transaction has its own quirks, from family caveats to complicated cave ins with old mortgages. At Pearson Chambers we read the fine print, spot the traps, and negotiate early release requests so that neither party gets caught short. We speak plain English, answer calls promptly, and charge fair, transparent fees.

Conclusion—Next Steps

Section 27 can be a genuine win win when the rules are followed. Vendors gain breathing room, buyers keep their legal safety net, and settlements sail through on time. Yet a single misstated mortgage figure or missed deadline can trigger disputes that last longer than the settlement itself. Do not leave it to chance.

Ready for clarity? Contact Pearson Chambers Conveyancing for a friendly chat and a free Section 32 contract review. We will confirm whether early deposit release is safe in your circumstances and guide you from contract to keys.

Phone: 03 9969 2405
Email: contact@pearsonchambers.com.au