What is section 27? Should I agree to sign?

section 27

If you’re engaged in a property sale in Victoria, Australia, you may have come across the term “Section 27.” It’s an important aspect of real estate transactions, but many people are unsure about what it entails and whether they should agree to sign it. In this comprehensive guide, we’ll delve into Section 27, its requirements, implications, and why it’s crucial for both buyers and sellers in the property market.

Why is a deposit required?

Before we dive into the specifics of Section 27, let’s address the fundamental question of why a deposit is required in property transactions. A deposit serves as a demonstration of a buyer’s genuine interest and commitment to purchasing the property. It gives the seller confidence that the buyer is serious about the deal.

In most real estate transactions, the deposit is typically 10% of the purchase price. However, this percentage can vary based on the agreement between the parties involved. The deposit is held in trust until the sale is finalized, ensuring that the buyer doesn’t back out of the deal without a valid reason.

Who gets the deposits? The deposit is usually held by the seller’s real estate agent or a legal representative in a trust account until the property sale reaches its conclusion. At this point, it is either released to the seller or used as part of the purchase price.

What is a Section 27 Statement?

Now that we’ve established the importance of deposits, let’s move on to understanding what a Section 27 Statement is. A Section 27 Statement is a crucial document in property sales in Victoria, Australia. It is sometimes referred to as a “Section 27 Deposit Release” or simply “Section 27.”

In essence, a Section 27 Statement is a legal document that outlines the terms and conditions for the release of the deposit to the seller before settlement. It is typically prepared by the seller’s solicitor or conveyancer and serves as a formal request for the release of the deposit held in trust.

Why would a vendor issue a Section 27 Statement?

A vendor would issue a Section 27 Statement for various reasons. Some common scenarios include:

Financial Urgency: The seller might be in urgent need of funds, such as for the purchase of another property or to cover unexpected expenses.

Contract Termination: If the buyer has breached the contract and the seller chooses to terminate it, a Section 27 Statement can be used to request the release of the deposit as part of the resolution.

Mutual Agreement: In some cases, both the buyer and the seller may mutually agree to terminate the contract, and the deposit release can be facilitated through a Section 27 Statement.

Requirement of Section 27

To issue a Section 27 Statement, certain requirements must be met. These requirements are in place to ensure transparency and fairness in property transactions. Here are the key elements that must be present:

Vendor Disclosure: The Section 27 Statement should include all relevant details about the property, including any encumbrances, easements, and zoning information. Full disclosure is essential to avoid any legal disputes later in the transaction.

Cooling-off Period: In Victoria, buyers have a cooling-off period of three business days after signing the contract. During this period, they can cancel the contract without giving a reason. If the buyer chooses to do so within this timeframe, the deposit is refunded in full.

Sunset Clauses: A Section 27 Statement should address any sunset clauses in the contract. Sunset clauses allow either party to terminate the contract if certain conditions are not met within a specified timeframe.

Property Legislation: The Section 27 Statement must comply with the relevant property legislation in Victoria. This ensures that the document is legally binding and enforceable.

Reasons to have the deposit released

Buyers might wonder why they should consider agreeing to the release of the deposit before settlement. There are several valid reasons for doing so:

Flexibility: Releasing the deposit early can provide both the buyer and the seller with greater flexibility in managing their financial situations.

Resolving Disputes: If there are disputes or issues with the contract, releasing the deposit can be part of a resolution strategy.

Moving Forward: For sellers, early access to the deposit can help them secure another property or address financial needs promptly.

Mutual Agreement: It can be a mutually beneficial decision if both parties agree to the release.

What are the risks for the purchaser

While there are potential benefits to agreeing to the release of the deposit through a Section 27 Statement, purchasers should also be aware of the risks involved:

Loss of Deposit: If the buyer agrees to release the deposit and later decides not to proceed with the purchase, they risk losing the deposit.

Legal Obligations: Once the deposit is released, the buyer may have fewer legal grounds to terminate the contract.

Timing: If the release is not managed properly, it could affect the timing of the transaction and potentially lead to complications.

Given these risks, it is strongly recommended that buyers consult with a qualified conveyancer or solicitor before agreeing to the release of their deposit through a Section 27 Statement. These professionals can provide essential guidance and ensure that the buyer’s interests are protected.

Legal implication for not responding to vendors Section 27 Statement

Failing to respond to a vendor’s Section 27 Statement can have significant legal implications. It’s important to understand that the Section 27 Statement is a formal request, and a failure to respond can result in the following consequences:

Contract Continuation: If the buyer does not respond within the specified timeframe, the contract is typically considered to be continuing, and both parties are obligated to fulfill their respective obligations.

Risk of Dispute: Failure to respond can lead to disputes between the buyer and the seller regarding the deposit and the overall contract.

Loss of Negotiating Power: By not engaging in the Section 27 process, the buyer may lose the opportunity to negotiate terms and conditions that are favorable to them.

Legal Action: In some cases, the seller may take legal action against the buyer for failing to respond to the Section 27 Statement.

In summary, not responding to a vendor’s Section 27 Statement can complicate the property transaction and lead to legal issues. It is essential for both parties to engage in the process and seek legal advice if needed to protect their interests.


In conclusion, Section 27 plays a vital role in property transactions in Victoria, Australia. It provides a mechanism for the release of deposits before settlement and can be beneficial for both buyers and sellers under the right circumstances. However, it is not without risks, and careful consideration and legal advice are recommended before agreeing to sign a Section 27 Statement.

Buyers and sellers should fully understand the requirements and implications of Section 27, as well as their rights and obligations under the contract. Additionally, consulting with experienced conveyancers or solicitors can help navigate the complexities of Section 27 and ensure a smooth and legally sound property transaction.

If you’re involved in a property sale in Victoria and have questions about Section 27 or any aspect of the process, it’s advisable to seek professional legal advice to make informed decisions that protect your interests.


What does section 27 mean?

Section 27 refers to a legal provision in property transactions in Victoria, Australia. It allows for the early release of the deposit held in trust before the settlement of the property sale, provided certain conditions are met.

What is a Section 27 deposit release in Victoria?

A Section 27 deposit release in Victoria is a formal document that outlines the terms and conditions for releasing the deposit to the seller before the settlement of a property sale. It is a crucial part of property transactions in the state.

Is section 27 common?

Section 27 is relatively common in property transactions in Victoria, especially when there are circumstances that warrant the early release of the deposit. However, its use depends on the specific circumstances of each transaction.

How many days are mentioned in section 27?

The number of days for a Section 27 response may vary, but it is typically within a specified timeframe mentioned in the contract. Buyers are required to respond to the Section 27 Statement within this timeframe to avoid potential legal consequences. It is important to refer to the specific contract terms for the exact number of days.



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