Proposed changes to Section 27 of the Sale of Land Act could change when, and whether, Victorian sellers can access their deposit before settlement, at exactly the point in a sale when many vendors need it most.
Section 27 Deposit Release Victoria: Why the Proposed Laws Misunderstand What Vendors Actually Need
For many Victorian sellers, settlement day is not the end of a transaction. It is the middle of one. A sale is rarely an isolated event. It is usually one part of a larger move: into a new home, into retirement accommodation, out of a shared asset following separation, or through the administration of a deceased estate.
Section 27 of the Sale of Land Act 1962 exists because Parliament has long understood this. Once a contract of sale becomes unconditional and the purchaser raises no objection, it allows the deposit, money that already forms part of a completed transaction, to be released to the vendor before settlement. That access has helped Victorian sellers move through significant life transitions for decades.
The Consumer Legislation Amendment Bill 2026 would repeal Section 27 and replace it with a different model entirely. If you are planning to sell in the period ahead, it is worth understanding exactly what would change, and why the timing of that change matters more than it may first appear.
If you are concerned about the impact of these proposed changes, now is the time to make your views known to your local Members of the Legislative Council, where the Bill is currently being considered.
What Does Section 27 Currently Allow?
Section 27 allows deposit money to be released to a vendor before settlement, once the contract has become unconditional and the purchaser has not objected within the prescribed period. It is a statutory process, meaning the right to seek release, and the purchaser’s right to object, are both set out in law rather than left to negotiation between the parties.
In practice, this has meant that a seller who has already sold their home, with a purchaser who is not disputing the sale, can access funds that are legally already part of a completed transaction. Those funds are commonly used to secure a deposit on the next home, reduce the cost of bridging finance, discharge existing debt, or simply meet the ordinary costs of moving.
It does not create money. It simply allows access to money that is already the vendor’s.
What Would the Proposed Law Require Instead?
The Bill would repeal Section 27 and insert two new provisions in its place.
The first would allow deposit money to be released early, but only where the contract of sale itself contains a condition, agreed between the purchaser and the vendor, providing for that release. In other words, early release would no longer be a right available under law. It would need to be negotiated into the contract before it is signed.
The second would prevent the estate agent from retaining commission or auction expenses from the deposit before settlement, even in cases where the vendor and purchaser have agreed to early release.
In theory, deposit release remains possible. In practice, it may become considerably harder to obtain, and slower to be paid for, than it is today.
Why the Timing of This Change Is the Real Problem
The most significant issue with the proposed model is not the principle of requiring agreement. It is the point in time at which that agreement must be reached.
Under the proposed model, the condition allowing early release must be negotiated and included in the contract before it is signed, before the campaign has concluded, before the vendor has sold, and often before the vendor knows what their next move will require.
But the need for early deposit release does not usually arise at that point. It typically arises afterwards. A vendor sells their home, and only then finds and commits to their next purchase. A settlement period is extended, and the vendor’s financial position changes as a result. An unexpected cost arises during the weeks between exchange and settlement.
Under the current Section 27 process, a vendor can seek release when that need actually arises, and the purchaser remains protected through the objection process. Under the proposed model, if the condition was not negotiated at the outset, because the need had not yet emerged, no mechanism exists to seek release at all.
A provision that only assists vendors who predicted their future financial needs before they had even sold their home is not a like-for-like replacement for one that responds to circumstances as they unfold.
A Right Becomes a Negotiation
There is a second consequence worth understanding. Once early release depends on a contractual condition, it becomes something the vendor must obtain agreement to, rather than something available to them as a matter of course.
A properly advised purchaser may see little reason to agree to release funds early. Where a purchaser does agree, that concession is unlikely to be free. It may be reflected in the price, or elsewhere in the negotiation.
This matters most for the vendors who can least afford it. Those under the greatest financial pressure, the people Section 27 was designed to help, are often those with the least room to negotiate favourable terms. A statutory right available equally to every vendor risks being replaced by a private concession available mainly to those who need it least.
A Real Example
A recent transaction we managed illustrates exactly what is at stake.
The sellers were an elderly couple preparing to move into retirement accommodation. Like many people in their position, almost all of their wealth was tied up in the family home they were selling. They had identified the retirement accommodation they wished to secure, but did not have the cash available to do so before their own settlement. Family members had their own financial commitments and were not in a position to help bridge the shortfall.
Once their contract became unconditional and the purchaser raised no objection, the deposit was released under the existing Section 27 process. That release allowed the couple to secure the retirement accommodation they had chosen.
Under the proposed model, that outcome would have depended entirely on whether a release condition had been negotiated into their contract before it was signed, weeks before they had any certainty about their own next move. Without it, they may have lost the opportunity despite having already sold a valuable property.
This is exactly the type of situation Section 27 was designed to address, and exactly the type of situation the proposed changes put at risk.
What About the Agent’s Commission?
The second element of the proposed change affects estate agencies directly, and it is worth understanding regardless of which side of a transaction you are on.
Under the proposed model, an agent could not retain commission from an early-released deposit before settlement, even where the vendor and purchaser have both agreed to that release. The commission for work already completed, marketing, negotiation, the conduct of the campaign, would be held back for the length of the settlement period regardless.
Settlement periods of ninety, one hundred and twenty, or even one hundred and eighty days are not unusual in Victoria. For a small or independent agency, holding payment for completed work for that length of time, in every transaction, without exception, is a significant cash flow burden. That pressure is ultimately felt throughout the industry, including in the level of service and competition available to vendors.
No rationale for this specific restriction has been published by Government.
Could This Push Sellers Toward Bridging Finance and Delay?
That is a real possibility.
If early access to deposit funds becomes harder to secure, some vendors will be left with fewer options: delaying their next purchase, relying on more expensive bridging finance, or attempting to negotiate a longer settlement to give themselves more time. None of these outcomes is in a vendor’s interest, and none appears to have been weighed against the benefit the change is intended to deliver.
The Real Estate Institute of Victoria has raised similar concerns in its own submission on the Bill, describing the change as a significant departure from established conveyancing practice that could adversely affect vendors without delivering a clear consumer benefit.
Property Owners Should Make Their Views Known
The Bill has passed the Legislative Assembly and is now before the Legislative Council, where it can still be amended or blocked before becoming law.
Because it remains before Parliament, property owners, vendors and industry participants should take this opportunity to make their views known to their local Members of the Legislative Council before these changes are finalised.
In our view, the proposed repeal of Section 27 should not proceed in its current form. It risks weakening the position of vendors at exactly the point in a transaction when they are managing one of the most significant financial transitions of their lives.
If you are concerned about the impact of these proposed changes, consider writing to your local Members of the Legislative Council, asking them to oppose the repeal of Section 27, or at the very least, to support further consultation with vendors, purchasers, agents and industry organisations before any final decision is made.
Property owners, buyers and industry participants can find and contact current members of the Victorian Legislative Council to make their views known before the Bill is considered.
What Should Vendors Do Before Selling?
If these reforms proceed, planning ahead will matter more than ever.
If early access to deposit funds may depend on a condition negotiated into the contract before signing, that conversation needs to happen earlier in the process, not after a buyer has already been found. For anyone selling property in Melbourne’s Inner East, understanding how these changes could affect your settlement and cash flow should be part of the conversation from the outset, not an afterthought once a contract has been signed.
That includes:
- Understanding your own likely settlement timeline and financial needs before the campaign begins
- Discussing early release with your conveyancer or solicitor before a contract is drafted
- Factoring potential bridging costs into your overall selling strategy
- Choosing a method of sale and settlement terms that support your circumstances
This is where experienced advice matters. The solution is not panic. The solution is preparation.
Get Clear Advice Before You Sell
At Clements International, we believe vendors deserve to understand exactly how legislative change could affect their sale, well before they sign a contract. The proposed changes to Section 27 may add complexity for sellers, but the fundamentals of a well-planned campaign remain the same.
You need to understand your timeline. You need to understand your options. Most importantly, you need a strategy that protects your position from the outset.
If you are considering selling and want to understand how the proposed changes to deposit release may affect your plans, request a property appraisal with Clements International. We can provide clear advice on value, timing, settlement structure and how to manage your campaign with confidence. To discuss your options before going to market, speak with Clements International.
Request your property appraisal today and make an informed decision before you go to market.
This is the 2nd in a series examining the property-related provisions of the Consumer Legislation Amendment Bill 2026.
Read our earlier article on the proposed reserve price disclosure requirements for auctions and fixed-date sales.