To buy/sell or not to buy/sell?
To Buy/Sell or not to Buy/Sell!
Whether watching television, searching the internet or driving to work or to the shops, we are constantly reminded that the real estate market is booming. FOR SALE or SOLD signboards are popping up everyday. One often misunderstood part of the sale process is the Section 27 release of deposit.
What is a Section 27 Statement
A section 27 Statement (commonly known as an early release of deposit authority) allows the vendor to request access to deposit funds paid by the purchaser prior to settlement.
A section 27 Statement can be served when the Contract of Sale (Contract) is not subject to any conditions. This means that all the additional conditions to which the Contract may be subject (such as the approval of finance) have been satisfied and the “cooling off period” has expired. It is important to note that a property which is sold at auction is unconditional on the day of sale.
Obtaining access to the deposit early can provide the vendor with financial assistance prior to settlement. The funds can be useful if, for example, the vendor wishes to purchase a property prior to settlement and requires additional funds to secure the property.
There are specific particulars that the vendor must disclose on the Section 27 Statement. These include details of any mortgage over the land and particulars of any Caveat lodged in respect of the land. If the purchaser is not satisfied by the particulars disclosed in a Section 27 Statement, they may object within 28 days of the Vendor issuing the Statement.
If the purchaser fails to provide a valid objection or fails to reply within 28 days of receiving the particulars, pursuant to Section 27(7) of the Act, they shall be deemed to have given authorisation to the early release of the deposit.
There are a number of risks involved with consenting to a Section 27 Statement, which is why it is important to engage a solicitor to assist when reviewing the particulars of the Section 27 Statement.
Unless the parties otherwise agree, the purchaser is required to pay the deposit to the vendor’s licensed estate agent; or to the vendor’s legal practitioner. The deposit is held until settlement, or until the Section 27 Statement has been accepted by the purchaser.
The vendor’s solicitor will instruct the estate agent to release the deposit upon receipt of a fully executed Section 27 Statement or if the 28 days has expired with no objection, whichever is the former.
When the deposit is released, the estate agent may retain out of the deposit moneys any amount owed in relation to the transaction. It is important for the vendor to review the sales account from the estate agent prior to the release to ensure the amount withheld is accurate.
If you are a first-time home buyer, have outgrown your existing home or you are buying an investment property, or you are contemplating selling or buying a property the Property Team is here to help navigate you through the buying and selling process.
Please contact us on 9870 9870 to speak with our Property lawyers who will to assist you and answer your all of questions.