Hi ozperp
Ah! And there's the rub!
Law and Regulations under Law, are open to interpretation but a basic fundamental is that people cannot be compelled to disadvantage themselves.
The early release of deposit provisions are not to create a 'right' but to create a sensibility.
The deposit monies are in limbo during the period between the contract becoming unconditional and settlement.
The Agent holds the money in their Trust Account as a Stakeholder, but no party owns the money and cannot access that money until certain future events occur ie the settlement of the property.
Requisitions on Title are, for the most part, a formality but releasing what can be a considerable amount of money is not going to be jeopardised if the vendor, for example, receives a Notice to Fence after the contracts are exchanged however if the vendor increases the debt against the property, or falls into arrears on the mortgage loan, or does anything which may lessen their entitlement to deal with the property ie settle, this may create a disadvantage to the purchaser.
Accordingly, if the purchaser has good reason to withhold permission for the release of the deposit prior to settlement then they cannot be compelled to release the deposit
But there must be a 'good reason' for withholding permission
Over the years, I have not allowed (as distinct from 'refused') the early release for some simple reasons such as a 30 day settlement which did not allow for any significant measure of time between answers to Requisitions and Settlement, and I have had customers who have not allowed (that is, refused) early release because their Conveyancer found that the mortgage was in arrears or that there would be insufficient funds to complete and settlement was in doubt from the outset
I cannot recall any purchase of mine where I have paid a 10% deposit and in some cases, have paid a very minimal deposit which was certainly less than the Agent’s commission or expenses and would have been insufficient to achieve an Account Sale and therefore there was no point in releasing the deposit earlier. The deposit, of course, is simply part of the purchase price paid at a date prior to settlement.
The Law may be an *** (this word is donkey, but the spell check censor has decided this famous quote is a bit rude!), but the law cannot and does not seek to impose hardship or disadvantage. The Law asks: What would a ‘Reasonable Person’ do?
As I understand it, the reason why Victoria has this provision is that in times past the REIV was a strong lobby group and from a commercial practice point of view, why should an Agent, who has completed their professional task, wait – in some cases, many months – to be able to do an Account Sale when the money was there and the Agent had incurred costs in achieving the sale for the Vendor.
The buying and selling of property is, by it’s very nature, a commercial transaction. The Agent is running a business and if the sale is unconditional deserves to be paid for their work.
But the desire of the Vendor to receive the balance of deposit money or the desire or need of the Agent to be paid for their work or reimbursed their expenses cannot take precedence over the rights of the Buyer to have their interests protected
However, having said all that, a Buyer may not ‘unreasonably withhold’ permission to release the deposit just because they feel uncomfortable about it. If they had not wanted to release the deposit then they had the opportunity to negotiate a smaller deposit, secure the purchase with a Deposit Bond or to impose conditions on the release of the deposit when negotiating the sale, not just dig their heels in when the sale has become unconditional and refuse to release without reason.
Buyers are not lambs to the slaughter. A Buyer, by definition, is an Adult entering into a Contract. Due Diligence includes negotiating fair and reasonable terms and conditions of the Contract acceptable to both parties and the payment and release of a deposit form part of the terms and conditions negotiated by the Buyer.
The Agent is there to ensure that the Vendor’s interests are protected and the Buyer must protect themselves and to seek advice, if necessary, before entering into the Contract.
Caveat Emptor includes all things but once signed and exchanged the Contract stands and the Contract embodies the law. In Victoria that includes provision for the early release of any monies paid as part of a deposit. The time to opt out of that provision of the Sale of Land Act is when negotiating the Contract unless matters later come to light which the Buyer would have good reason to believe may disadvantage them.
So where is this written in law? Everywhere and nowhere. In all things we must endeavour to act in a reasonable manner and the Buyer must be Aware that they, as well as the Vendor, will be required to act reasonably and in accordance with the law throughout the execution of the contract.
Cheers
Kristine