What is a Section 27 Statement?

Property Law: 27 February 2024

Author: Lauren Woolley & Ralph Davies - Our People

Most deposits paid towards the purchase of a property, are usually held by a legal practitioner (or conveyancer), or real estate agent, in trust as a stakeholder. Often the vendor requires access to the deposit before settlement to, for example, put a deposit on another property.

The release of the deposit is only possible in certain circumstances and is regulated by section 27 of the Sale of Land Act 1962 (Vic). Accordingly, the process for obtaining early access to the deposit is often facilitated by a process commonly referred to as a Section 27 Statement.

Broadly, section 27 of the Sale of Land Act 1962 (Vic) stipulates that a deposit may be released provided four elements are met:

• The contract of sale is not subject to any condition in favour of the purchaser;
• The purchaser has accepted title (or deemed to have accepted title);
• The vendor has provided notice in writing to the purchaser of any mortgages or caveats over the land which is the subject of the transaction; and
• The purchaser is satisfied that the particulars provided by the vendor above (generally in the form of a Section 27 Statement) are accurate, and they evidence that the purchase price is sufficient to discharge any moneys owing over the property (e.g., a mortgage).

If the purchaser is not satisfied with the information provided, they must give the vendor notice in writing setting out their reasons. Importantly, in the event the purchaser does not give such notice within 28 days of receiving the Section 27 Statement, the vendor may assume that the requirements under section 27 of the Sale of Land Act 1962 (Vic) have all been satisfied, and the deposit can be realised.