When selling a property, most Vendors believe that they are entitled to access the deposit paid by a purchaser prior to settlement.
Whilst, Section 27 of the Sale of Land Act 1962, provides that a Vendor may request access to a deposit paid by a purchaser. Purchasers are given the opportunity to object to the early release of the deposit, within 28 days of the request being made, thus preventing the release of the deposit.
Once a valid objection is raised by the purchasers, the deposit cannot be released to the vendor till at the time of or after settlement. Whilst the below is not an exhaustive list, here are a five reasons why a deposit may not be released to a Vendor;
1. The contract is not yet unconditional, i.e. building & pest inspections and finance clauses have not expired.
2. A bank letter satisfying the requirements for release of the deposit under Section 27 of the Sale of Land Act has not been provided to the purchaser by the vendor.
3. The vendor has a mortgage over the property where he/she owes more than 80% of the property’s sale price.
4.There has been a caveat/ charge lodged over the property’s Title
5. Vendors mortgage is currently in default. Vendors should not rely on their deposit being released prior settlement, as this is never guaranteed.
To find out more speak to the team at Conveyancer.com.au.