A Section 27 — formally known as a Section 27 Statement under the Sale of Land Act 1962 (Vic) — is a document that allows a vendor (seller) to access the buyer’s deposit before settlement. It is a common document in Victorian property transactions that many buyers sign without fully understanding what they are agreeing to.

How Does a Section 27 Work?

When a buyer pays a deposit after signing a contract of sale, that deposit is normally held in trust by either the real estate agent or the vendor’s conveyancer until settlement. A Section 27 allows the vendor to withdraw the deposit from trust early — before the property settles — provided certain conditions are met.

What Conditions Must Be Met?

For a Section 27 statement to be valid, the vendor must disclose:

• Details of any mortgage or encumbrance over the property
• That the mortgage will be discharged before or at settlement
• That the deposit amount does not exceed 10% of the purchase price

The buyer has the right to object to the early release if the statement is incomplete or inaccurate.

Should I Sign a Section 27?

Signing a Section 27 is voluntary. Before signing, your conveyancer should verify:

• The vendor’s mortgage balance does not exceed the purchase price
• The mortgagee (bank) has confirmed it will release the property at settlement
• The vendor has sufficient equity to return the deposit if the deal falls through

If the vendor’s mortgage balance is close to or exceeds the purchase price, there is a risk you could lose your deposit if the vendor defaults before settlement. In this scenario, refusing to sign the Section 27 is the safer option.

What Happens If I Do Not Sign?

Your deposit simply remains in trust until settlement. The vendor cannot access it early. There is no legal obligation to sign a Section 27, and refusing does not put you in breach of the contract.

Common Mistakes Buyers Make

• Signing a Section 27 without checking the vendor’s mortgage balance
• Assuming the real estate agent has verified the vendor’s equity position
• Not asking their conveyancer to review the Section 27 before signing

How a Collings Property Advisor Helps

A Collings Property Advisor works with your conveyancer to review all documents in the transaction, including Section 27 statements. Our fixed fee of $4,500 + GST covers contract guidance and transaction support from offer to settlement.

Frequently Asked Questions

Is a Section 27 the same as a Section 32?

No. A Section 32 (Vendor’s Statement) is the document the vendor provides to the buyer before signing, disclosing all material facts about the property. A Section 27 is a separate document about the early release of the deposit.

Can a vendor force me to sign a Section 27?

No. Signing a Section 27 is completely voluntary. A vendor cannot make it a condition of sale.

Want expert guidance on every document in your property transaction? Book a Collings Property Advisory consultation for $4,500 + GST. Visit collings.com.au/portal to get started.