You’ve sold your property. Can you access the deposit before settlement?
It’s a common question with important implications.
Section 27 of the Sale of Land Act governs the early release of deposits in Victorian real estate transactions. The provision allows vendors to provide specified information to purchasers, who then have 28 days to indicate whether they are satisfied with the particulars provided. If the purchaser is satisfied or if a valid objection is not raised within the 28 day period, the deposit may be released before settlement.
The expectation of many vendors is that they will have access to the deposit sooner rather than later after signing a contract to sell their property. However, the early release of the deposit is not guaranteed. In particular, the law does not explicitly address whether the purchaser’s objection must be objectively reasonable or merely subjective. Recent case law suggests that the purchaser’s objection need not be objectively reasonable and that it is sufficient if the purchaser objects. If that happens, a vendor may have limited options to overcome the objection.
If you are a vendor and you need the deposit to be released perhaps to fund the deposit on a purchase, do not assume that you will be successful in having the deposit released quickly or at all. You may have to wait until settlement occurs to have access to the deposit so it would be prudent to have a Plan B.
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.