Section 27 Deposit ReleaseSection 27 of the Sale of Land Act says that the deposit paid by a purchaser on the purchase of real estate can be released prior to settlement in certain circumstances.
Unfortunately, the provisions of Section 27 are such that there is never any guarantee that the vendor will have access to the deposit funds prior to settlement .
Early release is possible where five requirements have been fulfilled:
Basically, what this means is that the vendor has to provide the purchaser with details of any mortgage or caveats affecting the property in the form of a Section 27 Deposit Release Statement, the purchaser has to be satisfied that the amount owing against the property is low enough to be covered by the balance of purchase funds payable at settlement , all conditions of the Contract have been fulfilled, and the purchaser has signed and returned the Section 27 Deposit Release Statement to the vendor as confirmation that release has been approved.
Most lawyers and conveyancers automatically object to the release of the deposit , and it is unlikely that the deposit will be released unless the vendor holds "clear title" (i.e. there is no mortgage over the property). This because "redraw facilities" (where the vendor can withdraw money from the mortgage loan account) make it very difficult to determine exactly how much the vendor will owe on a mortgage between the sale and settlement .
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