Early Release of Deposit

Posted on April 28, 2007 by | 4 Comments

Peter Mericka B.A., LL.Bby Peter Mericka B.A., LL.B Real Estate Lawyer and Qualified Practising Conveyancer Victoria Lawyers Real Estate

Enzo Raimondo, CEO of the Real Estate Institute of Victoria (R.E.I.V.) regularly provides consumers with his understanding of the law affecting the sale of real estate. Unfortunately, Enzo’s explanation of these laws is often quite limited, and his offering in the Domain section of The Age Saturday 28 April 2007, is a case in point. Estate agents can deduct their commission from the deposit! In his article Enzo suggests that a person who sells one property can use the deposit paid by the purchaser of that property to pay the deposit on the purchase of another by arranging for early deposit release. Enzo presents this as something of a helpful hint for vendors, but doesn’t go into detail.

As a practitioner in property law, I find Enzo’s article both mischievous and misleading.

As Enzo acknowledges in his article,

“…if an early release is agreed to, the selling agent may deduct commission and expenses from the deposit when the release occurs.”
This is a very important point, because in my experience estate agents will always put their own interests ahead of those of the vendor when the deposit is needed for the purchase of another property.

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  • Is it the same as this in other Australian States?

  • Tim Tierney says:

    Early release of the deposit is not typical in Tasmania where there is no statutorty right to release of a deposit.

    Purchasers are cautious in case unexpectedly the sale does not proceed and the purchaser may have difficulty recovering the deposit.

    Purchasers may need to to secure their position against such an event . Purchasers may need to enquire of the extent of the vendors equity in the property .

    Cooperating with the Vendor may have advantages. It may establish a better working relation with the Vendor which may be of assistance. A little give and take goes a long way to make transactions proceed smoothly. A purchaser may need a reciprocal concession from the vendor.

  • http:// says:

    Question: Under what conditions can you object to early release of deposit even if there are no mortgages or caveats on a title?
    Also, once the deposit is released is there any assurance that the vendors can not put a caveat on the property at a later stage?

  • The contract may be subject to special conditions which allow the purchaser to cancel, e.g. finance condition, building inspection condition etc.

    The vendors will probably not want to lodge a caveat over their own property.

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