Section 27

Hi all,

Ive been asked to sign a section 27 by the vendors to release the deposit money earlier to them. I have never signed one of these before with previous purchases. I was just wondering if there are any risks to me if I agree to release the money early and signing the form?
 
Hi Zayne,

check with your solicitor for their advice. Generally deposit release helps the agent acting for the vendor get their commission paid before setlement is effected
 
you dont have to sign it,

the agents normally lodge the check and have the funds straightaway anyway dont they, i.e. they take their commission straightaway from the deposit cheque
 
I agree with OC1. What is in it for you? Ask the agent that, it may cost $500 for your signature:) Beat the agents at their own game.
 
Hi all,

Ive been asked to sign a section 27 by the vendors to release the deposit money earlier to them. I have never signed one of these before with previous purchases. I was just wondering if there are any risks to me if I agree to release the money early and signing the form?

Hi zayne

Victoria is the only State in Australia with an 'early release of deposit' provision in the Sale of Land act.

It is a 'fair enough' common sense provision. If the sale is unconditional, the buyer may not 'unreasonably refuse' to allow the release of the deposit funds prior to settlement.

The vendor may be relying on the release of the funds to enable them to put a deposit on a property, and if you have paid a cash deposit then the funds are there to be disbursed.

If you had lodged a Deposit Bond, or negotiated a small deposit, then the S.27 provision would not practically apply.

Risks to you are mitigated by the provisions of the Act and by the diligence of your conveyancer / solicitor eg if the vendors' are in arrears or default on their mortgage, or if the cleared funds from the sale will be insufficient to discharge the mortgage over the property, you can not be required to release.

But if all is in order, and you accept the answers provided to your Requisitions on Title, then you do not have reasonable grounds to refuse to release the deposit.

Many efficient Agents include the S.27 papers with the original Contract of Sale, and the papers are then held on file until the sale becomes unconditional, Requisitions have been answered satisfactorily and all necessary checks and searches have been completed.

The early release is then applied as an Account Sale by the Agent: Their Commission and agreed Expenses are deducted from the amount held as deposit and the balance remitted to the vendor.

The Agent has done their job once an unconditional contract has been achieved. It serves no good purpose (apart from spite!) for them not to be paid for another eg 90 days. But the deposit cannot be released willy-nilly so make sure you discuss this with your conveyancer / solicitor - I would suggest returning the signed S.27 to them so that they are in control and fully aware of all stages of the sale.

And for next time - if early release of a deposit concerns you, then negotiate the use of a Deposit Bond. Very common in other parts of Australia, Deposit Bonds are becoming more readily accepted in Victoria and for a small fee you - and the vendor - can have peace of mind.

Cheers
Kristine
 
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