Victoria’s Sale of Land Act changes: new deposit and Section 32 rules explained

with Madelene Crispo

Victoria has changed the laws governing property deposits and Section 32 vendor statements, with important consequences for buyers, sellers and estate agents.

The Consumer Legislation Amendment Act 2026 (Vic), which received Royal Assent on 8 September 2026, introduces significant amendments to the Sale of Land Act 1962 (Vic).

The reforms make two major changes to property transactions in Victoria:

• Section 27 will be repealed and early release of a buyer’s deposit will instead require an express condition in the contract of sale.
• Sellers will generally be required to make the Section 32 vendor statement available at least 14 days before an auction, fixed-date sale or the signing of a contract.

The changes commence on a date to be proclaimed or, if they have not commenced earlier, on 1 June 2027.

Buyers who sign a contract without understanding an early deposit release condition could be exposed to considerable financial risk. Sellers, estate agents, conveyancers and property lawyers will also need to review their contracts, documentation and sale processes before the new provisions take effect.

What is changing under Victoria’s Sale of Land Act?

Is Section 27 being abolished in Victoria?

Yes. Section 27 of the Sale of Land Act, which has long governed the early release of a property deposit to a seller before settlement, will be repealed.

Under the existing Section 27 process, a buyer may authorise the early release of the deposit in writing, but only when certain statutory requirements have been satisfied. These include:

1. the contract is not subject to a condition operating for the benefit of the buyer;
2. the buyer has accepted title or may be deemed to have accepted title; and
3. the seller has provided written notice of relevant mortgage and caveat details and the buyer has confirmed that they are satisfied with those particulars.

These requirements provide safeguards before money held by the stakeholder can be released to the seller.

The current protections apply as part of the statutory process and cannot simply be removed by inserting a conflicting term into the contract. Section 28 of the existing Act makes a contractual provision void to the extent that it is inconsistent with the relevant provisions of the Act.

Can a Victorian property deposit still be released before settlement?

Yes, but the mechanism will change.

New Section 26A provides that deposit money held by a stakeholder must not be released to the seller before settlement unless the contract of sale contains an express condition, agreed to by the buyer and seller, authorising early release.

The reforms therefore replace the existing statutory Section 27 process with a contractual mechanism.

Whether a deposit may be released early will depend on the wording of the contract. Buyers will need to identify any early release condition and understand its consequences before they sign the contract or bid at auction.

What risks do the new deposit rules create for buyers?

An early deposit release condition could allow the seller to obtain the buyer’s deposit before settlement without the existing Section 27 requirements having been completed.

This does not mean that every early release condition will necessarily be unfair or inappropriate. There may be transactions in which the parties knowingly agree that an early release is commercially acceptable.

The risk is that an inexperienced or unrepresented buyer may sign a contract containing such a condition without appreciating that the deposit could be released before ownership of the property is transferred.

If the sale subsequently fails to settle and the seller cannot return the money, recovery of the deposit may become difficult, expensive or, in the worst case, impossible.

Buyers should therefore obtain independent legal advice before signing a contract that permits the early release of their deposit.

Why first-home buyers and auction buyers may be particularly exposed

The changes may have a disproportionate effect on first-home buyers and people purchasing at auction.

Under the existing framework, the Section 27 restrictions form part of the statutory process. Under the new framework, a buyer who signs a contract containing an early release condition may generally be bound by that contractual agreement.

Auction buyers face an additional risk because the contract is generally unconditional once the property is knocked down to the successful bidder. There is usually no cooling-off period for a property purchased at a publicly advertised auction or within the periods prescribed before and after the auction.

Obtaining advice after winning the auction may therefore be far too late. Buyers should arrange for the contract and Section 32 statement to be reviewed before bidding.

Could an early deposit release condition be an unfair contract term?

The unfair contract terms regime under the Australian Consumer Law may be relevant in some circumstances, particularly where an early release condition forms part of a standard-form consumer contract.

However, whether a particular term is unfair will depend on the contract, the transaction and the circumstances in which the term is used. Buyers should not assume that the unfair contract terms regime will allow them to escape a condition after the contract has been signed.

The operation of the Australian Consumer Law in this area is likely to receive closer attention once the new provisions commence and early release conditions become more common.

Can an estate agent take commission from an early-released deposit?

Under new Section 26B, an estate agent authorised to pay deposit money to the seller under Section 26A will be prohibited from retaining any part of the deposit before settlement or rescission of the contract.

The prohibition applies to:

• sales commission;
• auction expenses; and
• any other amount to which the agent claims to be entitled.

This reverses the existing position under Section 27(9), which permits an agent to retain commission and auction expenses from a deposit released before settlement.

Once the new provisions commence, estate agents will need to recover their commission and expenses directly from the seller, either at settlement or under a separately agreed payment arrangement.

When must a Section 32 vendor statement be available?

The reforms amend Section 32(1) of the Sale of Land Act. Instead of requiring the seller to give the vendor statement to the buyer before the buyer signs the contract, the seller will be required to make the statement available from the “sale availability time”.

The sale availability time is generally:

• at least 14 days before a publicly advertised auction or other fixed-date sale; or
• in any other case, at least 14 days before the contract of sale is signed.

The 14-day requirement is not confined to auctions. It will also affect private sales, including sales in which the buyer and seller may otherwise be ready to exchange contracts within a shorter period.

The change from “give” to “make available” alters the nature of the seller’s obligation. Rather than requiring direct provision to a particular buyer immediately before signing, the new provision requires the statement to be available during the prescribed period before the sale.

What happens if the Section 32 statement changes?

The reforms introduce a requirement for the seller to give the buyer written notice of any change to the vendor statement before the buyer signs the contract.

This means sellers, estate agents and their legal advisers will need processes for:

• checking whether information in the vendor statement remains current;
• identifying changes arising during the marketing campaign;
• giving written notice of those changes to prospective buyers; and
• keeping records showing when the statement and any subsequent notices were made available or provided.

This will be particularly important where an auction campaign runs for several weeks or information affecting the property changes shortly before the scheduled sale.

Do the changes apply to contracts signed immediately after commencement?

The amendments include transitional arrangements for the new Section 32 requirements.

Under those arrangements, the amended Section 32 provisions will not apply to contracts entered into during the first 28 days after commencement. The previous Section 32 requirements will continue to apply to contracts signed during that period.

Buyers, sellers and practitioners should confirm which version of the law applies to a transaction taking place near the commencement date.

What should property buyers do?

Before signing a contract or bidding at auction, buyers should:

• have the contract and Section 32 statement independently reviewed;
• check whether the contract contains an early release of deposit condition;
• understand when and to whom the deposit may be released;
• consider what may happen if the seller cannot complete the transaction;
• seek amendments to any condition that creates unacceptable risk; and
• avoid relying on the assumption that a problematic condition can be challenged after signing.

What should sellers and estate agents do?

Sellers, agents and their advisers should prepare for the reforms by:

• reviewing standard contracts and special conditions;
• allowing enough time to prepare and make the Section 32 statement available;
• updating auction and private-sale timelines;
• establishing procedures for notifying buyers of changes to vendor statements;
• reviewing commission and expense payment arrangements; and
• keeping reliable records of when documents and notices were made available.

Agents will need to ensure that sellers understand that commission and auction expenses cannot be deducted from an early-released deposit before settlement or rescission.

Frequently asked questions

When will the new Victorian property sale laws commence?

The relevant amendments will commence on a date proclaimed by the Victorian Government. If they have not commenced earlier, they will automatically commence on 1 June 2027.

Is Section 27 being repealed?

Yes. Section 27 of the Sale of Land Act 1962 will be repealed and replaced by a new contractual mechanism for the early release of deposit money.

Can a seller still receive the deposit before settlement?

Yes. Early release will still be possible if the contract of sale contains an express condition, agreed to by the buyer and seller, authorising the release.

Does a buyer have to agree to the early release of a deposit?

The contract must contain an express condition agreed to by the parties. Buyers should obtain independent advice before signing a contract containing such a condition, particularly when purchasing at auction.

What happens if an early-released deposit cannot be returned?

The buyer may need to pursue recovery from the seller. Recovery could be difficult if the seller has used the money, is insolvent or has insufficient assets. The buyer’s rights will depend on the contract and the circumstances of the failed transaction.

Can an estate agent deduct commission from an early-released deposit?

No. Under new Section 26B, an estate agent cannot retain commission, auction expenses or another entitlement from the deposit before settlement or rescission.

When must the Section 32 statement be available?

It must generally be made available at least 14 days before a publicly advertised auction or fixed-date sale. In other cases, it must generally be available at least 14 days before the contract is signed.

Does the 14-day requirement apply only to auctions?

No. The requirement also applies to other property sales, including private sales where no publicly advertised auction or fixed-date sale is scheduled.

What if information in the Section 32 statement changes?

The seller must give the buyer written notice of the change before the buyer signs the contract.

Should a buyer obtain advice before an auction?

Yes. Auction contracts are generally unconditional and cooling-off rights usually do not apply. The contract and Section 32 statement should be reviewed before the buyer bids.

Get advice before signing a property contract

The reforms change the way deposits and vendor statements will be handled in Victorian property transactions.

For buyers, protection will depend more heavily on identifying and negotiating the terms of the contract before signing. For sellers and estate agents, the new regime will require earlier preparation, updated documentation and tighter sale processes.

Hunt & Hunt’s Property Law team advises buyers, sellers, developers, investors and estate agents on contracts of sale, Section 32 vendor statements, deposit arrangements and property transactions throughout Victoria.

Contact Hunt & Hunt before signing or preparing a property contract under the new regime.

This article provides general information only and does not constitute legal advice. The application of the legislation will depend on the circumstances of each transaction. Specific legal advice should be obtained before acting or relying on this information.

Marilyn Wai

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