When can a deposit be released early in Victoria?
Three things need to be true for early release to apply:
- The contract has no ongoing conditions for the buyer's benefit, like finance or building and pest inspection clauses.
- The seller gives the buyer a written statement (a Section 27 statement) setting out any mortgages or caveats over the property title.
- The buyer is satisfied the statement is accurate, and that the purchase price is enough to discharge all mortgages over the property. In practice, the total owing to discharge needs to be no more than 80% of the purchase price.
Because the contract has to be unconditional first, early release usually cannot happen until the cooling-off period has ended and any finance or building and pest conditions are satisfied. See complying with contract conditions (VIC) and the Section 32 vendor statement (VIC) for how the disclosure side fits together.
What does the seller have to disclose in a Section 27 statement?
The statement is the seller's evidence that the deposit is safe to release. It needs to give the buyer enough detail to check that the sale price will clear whatever is owed on the title. In practice it sets out:
- Particulars of any mortgage or charge over the land, and the amount needed to discharge it.
- Whether the loan is up to date or in arrears or default.
- Particulars of any caveat lodged over the title.
Those particulars are expected to be backed by written confirmation from the mortgagee, usually a letter from the bank confirming the payout figure. A statement that just asserts the numbers, with nothing from the lender to support them, is one of the main reasons a buyer can object. If the property is unencumbered, the statement says so.
When can a buyer object, and what happens to the deposit?
If the buyer is not satisfied, they have 28 days after receiving the statement to serve written notice objecting to the early release and stating their reasons. A valid objection keeps the deposit in trust until settlement, so it stays protected. Common grounds to object include:
- The total owing to discharge is more than 80% of the purchase price, so the sale may not clear the debt.
- The seller has not provided written confirmation from the mortgagee to back the figures.
- There is a caveat or other interest on the title that has not been resolved or accounted for.
- The statement is inaccurate, incomplete, or misses a mortgage or charge (a title defect).
If no valid objection is made within that 28-day window, the buyer is deemed to have accepted the statement and authorised the release, and the deposit goes to the seller before settlement.
Objection scenarios at a glance
| Situation | Grounds to object? | What happens to the deposit |
|---|---|---|
| Contract unconditional, statement accurate, payout 80% or less of the price | No valid ground | Released to the seller if no objection within 28 days |
| Payout figure exceeds 80% of the purchase price | Yes | Stays in trust until settlement |
| A caveat or mortgage the statement doesn't account for | Yes | Stays in trust until settlement |
| No written confirmation from the mortgagee to back the figures | Yes | Stays in trust until settlement |
| Contract still subject to finance or building & pest | Yes, the statement is premature | Stays in trust until settlement |
Does the seller actually get the full deposit?
Not usually. Where the sale went through an estate agent, the agent can take its commission and any agreed advertising or auction costs out of the deposit before the balance is paid to the seller. So a released deposit of, say, 10% of the price nets the seller less than the headline figure once the agent is paid. If you are the seller, check the agent's sales statement against your agency agreement before you rely on the released funds, so the amount withheld is what you actually agreed to.
Can a contract shorten the 28 days or force early release?
No. The 28-day objection period is a statutory right, and a special condition that tries to cut it down or bypass it can be struck out. In GLP Batesford Pty Ltd v 68 Bridge Road Land Pty Ltd [2023] VSCA 325, the Victorian Court of Appeal held that a special condition shortening the objection window from 28 days to five business days was void for contravening Section 27, and that the seller's attempt to end the contract because the buyer had not released the deposit was invalid. The takeaway for buyers: you cannot be defaulted for using the full time the Act gives you, or for refusing early release on valid grounds.
For how deposits are held more generally, see how the deposit works.
General information only, not legal advice. Section 27 statements and objections run to strict timing, so check your specific contract and title with your conveyancer or lawyer.
