Also known as an Early Release of Deposit Authority, the Section 27 is a request from the seller to the buyer to obtain their deposit prior to settlement. The buyer must consent to the request before the deposit can be released.
Why is it called a Section 27 (Early Release of Deposit Authority)?
The name of the Section 27 statement comes from Section 27 of the Sale of Land Act 1962, which sets out under what certain circumstances the seller may be able to obtain the buyer’s consent to early release of their deposit money.
What is required to be included in the Section 27 statement?
The Section 27 statement requires the seller to disclose details of any applicable debt on the property. This is for the buyer’s information to check that the property’s purchase price will cover the money remaining on the seller’s debts. Debts can include mortgages, caveats and charges.
This ensures fairness and lower risk to the buyer when they make the important decision to agree or object to releasing their deposit before the settlement date.
What if the buyer objects to the Section 27 statement?
Once a Section 27 is issued to the buyer, the buyer can either:
- Object to the request: The buyer is given 28 days to make any objection to the request, after which the funds are automatically released. This means that if the buyer does not object within 28 days, then it will be deemed as an automatic consent to release the deposit early to the seller. If the buyer objects within the 28 days with reasonable justifications then the seller will not receive an early release of the deposit and must wait until the settlement date.
- Consent to the request: The deposit holder (usually the agent) can release the deposit to the seller once written confirmation of consent is received from the buyer.
Reasonable justifications to object may include:
- The seller did not disclose details of their mortgage in their Section 27 statement
- There is a caveat on the title
- The purchase price does not cover required amount to payout the debts on the property
W Legal Group can help!
We can help you form and prepare a complete and accurate Section 27 with all necessary information to assist you in obtaining your deposit as quickly as possible. We include this work as part of our all inclusive service and package fees for sellers. Feel free to contact us via hello@wlegalgroup.com.au or +61 3 9590 6180 for more information.
