Quick Summary
In some property sales, the vendor can request early access to the deposit paid by the purchaser before settlement occurs. This process, known as a Section 27 release, can help manage cash flow between sale and purchase but comes with specific legal and timing requirements.
What Is a Section 27 Statement?
Under Section 27 of the Sale of Land Act 1962 (VIC), a vendor may apply to have the deposit released from the trust account before settlement.
The request must be made formally and accompanied by details of the existing mortgage, the amount owed, and written consent from the purchaser.
If approved, the deposit or part of it can be released from the real estate agent’s or solicitor’s trust account prior to settlement.
Need help understanding how an early deposit release affects your next purchase or bridging loan? Contact info@pinpointfinance.com.au.
When Is an Early Release Possible?
A Section 27 release can only occur if the following conditions are met:
- The contract of sale is unconditional.
- The vendor provides written details of any mortgages or caveats on the property.
- The amount owed on any existing mortgage is less than 80% of the property’s sale price.
- The purchaser consents in writing after receiving full disclosure.
If any of these steps are incomplete, the deposit must remain in trust until settlement.
Related Reading: Sale & Purchase Process
Benefits of a Section 27 Release
- Access deposit funds early to help pay a deposit on your next purchase.
- Useful for longer settlement periods where funds would otherwise sit idle.
- May allow you to pay down your loan temporarily or earn interest before settlement.
Risks and Disadvantages
- Early release is not guaranteed — it requires the buyer’s consent and full compliance with the legal process.
- The process can take several weeks due to required documentation and approvals.
- Complex mortgage structures (like redraws or lines of credit) can make it difficult to confirm exact balances owed.
- Not recommended for settlements less than 30 days away, as the process may not complete in time.
The Section 27 Process – Step by Step
- The vendor requests early release in writing.
- The vendor’s lender provides a statement showing the current mortgage balance.
- The vendor’s solicitor or conveyancer prepares a Section 27 Statement.
- The purchaser reviews and signs consent to release.
- The trust account holder (agent or solicitor) releases funds to the vendor.
- Any applicable commissions or fees are deducted before funds are transferred.
Tip: Always confirm with your conveyancer before relying on an early release approval is never automatic.
Tax and Finance Implications
- Once released, the funds belong to the vendor, not the trust.
- Lenders may view early access as income or available capital if applying for a new loan.
- It’s important to coordinate timing carefully with your broker and accountant to avoid cash flow issues.
Related Reading: Property Titles – Co-Ownership | Sale & Purchase Process
Common Reasons a Section 27 Request Is Declined
- The contract of sale is still subject to finance or other conditions.
- The buyer’s solicitor objects due to incomplete information.
- The vendor’s loan balance exceeds 80% of the property’s value.
- The property has a registered caveat or unresolved encumbrance.
If declined, the funds will remain securely held until settlement is finalised.
How Pinpoint Finance Helps
At Pinpoint Finance, we help vendors and buyers understand how Section 27 deposits interact with their broader finance and settlement strategy.
We can assist with:
- Coordinating bridging finance or short-term cash flow solutions.
- Liaising with lenders and solicitors to ensure compliance.
- Structuring your next purchase with the released funds efficiently.
Reach out to info@pinpointfinance.com.au before requesting an early release — we’ll help you plan your next step with confidence.