Section 27 deposit release, explained

Written and reviewed by Brandon Owens, Licensed Conveyancer (licence no. 001729L). Last reviewed 10 September 2026.

The deposit on a Victorian sale normally sits with a stakeholder until settlement. Section 27 is the mechanism that lets a vendor get it earlier, and it comes up on most sales. Here is what it means for each side.

What is a Section 27 deposit release?

When you buy property in Victoria, your deposit is usually held as a stakeholder by a legal practitioner, conveyancer or estate agent. Neither party can touch it until settlement.

Vendors often want it sooner, typically to fund the deposit on their own next purchase. Section 27 of the Sale of Land Act 1962 (Vic) is the statutory route to that. The vendor sends a request with prescribed particulars, and if the conditions are met the deposit can be paid out before settlement.

You will usually see it referred to as a “section 27 statement”, a “deposit release” or “the 27”.

When can a vendor ask for the deposit?

A vendor cannot make a valid request whenever they feel like it. The preconditions are specific.

• The deposit must be held as a stakeholder by a legal practitioner, conveyancer or estate agent.
• The contract must not be subject to any condition enuring for the benefit of the purchaser. Every purchaser condition, finance and building inspection included, must be satisfied or waived first.
• The purchaser must have accepted title, or be deemed to have accepted title.
• The vendor must have given the purchaser written particulars of any mortgage over the land, including the amount secured, whether further advances are provided for, the current interest rate, the repayment date and the instalment details, plus particulars of any caveat lodged over the title.
• Those particulars must show that the purchase price is sufficient to discharge all mortgages over the property.

There is also an important carve-out. Section 27 does not authorise release of deposit money held under section 9AA, which covers off-the-plan sales before the plan of subdivision registers. If you are buying off the plan and the plan has not registered, your deposit stays where it is.

The 28-day window, and what silence means

This is the part every purchaser should understand.

Once you receive the vendor’s particulars, you have 28 days. Within that time you can:

• Give written notice that you are satisfied. The deposit is released. A notice of satisfaction is deemed to be the authorisation the Act requires.
• Give written notice that you are not satisfied, with your reasons. Reasons are mandatory, not optional.
• Do nothing — in which case you are deemed satisfied and deemed to have given the authorisation, and the deposit can be released anyway.

That last outcome is the one to be clear about. Ignoring a section 27 request is not a way of refusing it. If you have a genuine objection, it has to be made in writing, with reasons, inside 28 days.

That said, the deeming provision does not override the preconditions. If the contract is still subject to a purchaser’s condition, or the particulars do not show the price is enough to discharge the mortgages, the statutory requirements are not met regardless of whether you replied.

Should you agree to release the deposit?

For most straightforward purchases, where finance is unconditional and the title is accepted, there is no strong reason to resist. The deposit is the vendor’s money in all but timing, and refusing without a proper basis achieves little.

The reasons to pause are practical:

• Conditions are not actually satisfied. If your finance is not formally unconditional, say so.
• The numbers do not work. If the particulars do not show the purchase price covering everything secured against the property, that is exactly what the reasons mechanism is for.
• Something is unresolved. An outstanding building order, an undisclosed caveat, or a dispute about what is included in the sale.

If the vendor knowingly or recklessly supplies false particulars, that is an offence, and the purchaser may rescind and recover the deposit.

The practical advice is simple: send it to your conveyancer the day it arrives. Twenty-eight days sounds generous and disappears quickly, and the consequence of missing it is that the decision gets made for you.

What happens to the deposit if the sale falls over?

Releasing the deposit early does not change who is entitled to it. If the contract is later rescinded and the purchaser is entitled to the deposit back, they are entitled to it back. The practical difficulty is that recovering money already paid out is harder than recovering money still sitting with a stakeholder, which is the real risk a purchaser takes on.

A change to watch

The Consumer Legislation Amendment Act 2026 will repeal section 27 and replace it with a different mechanism, under which stakeholder-held deposit money cannot be released before settlement unless the contract itself contains an agreed early-release condition. A related provision will stop an estate agent taking commission or auction expenses out of the deposit before settlement.

Those provisions had received assent but were not yet in force when this guide was last reviewed, with a statutory commencement backstop in 2027. This page describes the current process. We review it as commencement dates are proclaimed.

How Lodgedwell handles deposit release

On a purchase, we check the section 27 particulars against the contract and the title, tell you plainly whether the preconditions are met, and respond inside the 28 days so the decision is yours rather than the calendar’s. On a sale, we prepare and serve the section 27 as soon as the contract allows, because for most vendors the deposit is what funds the next move.

This guide is general information about Victorian property law, current at 10 September 2026. It is not legal advice and does not take your circumstances into account. Conveyancing law differs between Australian states, and this page describes Victoria only.