Section 27 Request - Release Deposit Early?

someguycalledpaul on 12/12/2016 - 12:37
Last edited 12/12/2016 - 12:38

Hi there,

After recently purchasing a house, we have had a request from the vendors to release the deposit early. Essentially we have a letter from the other side stating "The vendors are also purchasing and require the early release of deposit as a matter of urgency, prior to the 21st of December 2016."

So if i understand correctly:

  1. I release a deposit early, presumably in exchange for a warm and fuzzy feeling and to bear risk prior to settlement?
  2. My conveyancer is asking me to take out caveat insurance on the property for an additional $150.00 cost to me, to "insure my claim" given the additional "risk"

I dont understand whats in this for me? Is their logic to their request?..

Paul

Financial

Comments

  • bemybubble on 12/12/2016 - 12:44
    +1

    Sometimes people are cash short and want their deposit which I can understand.

    Myself personally have never taken out a caveat on a property prior to settlement (purchasing). But recently sold a property and the buyer did exactly that. Spoke with my conveyancer they told me that it's 'best practice' but he's never seen it actually work against anything in his career.

    At the end of the day from my understanding you still have a contract whether you release the settlement or not. Speak with your conveyancer to confirm.

  • Wampus on 12/12/2016 - 12:45
    +4

    Sounds like there's really nothing in it for you apart from that fuzzy feeling. Their issue is theirs alone… if you were going to grant it i'd ask them to cover the insurance bump

    • stratbargain on 12/12/2016 - 13:50

      I agree. Say sure, as long as they pay for the insurance (and any associated costs)

  • mskeggs on 12/12/2016 - 12:47
    +3

    You are in a negotiation, is there nothing you want?
    E.g. access to the property a fortnight early to paint or lay carpet, or a delay in settlement of a week to align better with your timing, or whatever?

  • scrambledeggs on 12/12/2016 - 12:50

    You're under no obligation to release the deposit early, but you have to give a reason for objecting the early release. In my opinion, just write what you wrote above and tell them to shove it.

    Otherwise, if you're feeling friendly, the website below states the following:

    "Is it a good idea for a purchaser to sign a Section 27?

    If the details from the bank show the vendor to have sufficient equity in the property to be able to discharge the mortgage at settlement, we think it is a good idea for the purchaser to consent to early release (and if they want to take extra steps to protect their interests, lodge a caveat or take out title insurance).

    First, it facilitates good relationships between all parties involved in the transaction, and if you later require some goodwill in return, they will be more likely to agree to some leniency (say if your bank delays settlement and the vendor is deciding whether to charge penalty interest or let you have early access to the property)…"

    http://www.nestlegal.com.au/blog/2015/12/20/what-is-a-sectio…

  • scrimshaw on 12/12/2016 - 13:30

    I was in the same boat and I did let them take the deposit money 2 weeks prior to settlement date.

  • JimB on 12/12/2016 - 13:34
    -1

    If I sold a property and they objected, I'm unlikely to take any care when moving furniture out of the house.

    But hey, it's only your house they are they currently living in.

    • tomsco on 12/12/2016 - 13:54
      +4

      And I would expect a person like you to be the same sort of person to have issues with if releasing the deposit early and then something arises come settlement.

      (Note: I have previously allowed a deposit to be released early to a vendor).

      • JimB on 12/12/2016 - 15:08

        You can take it as you will.

        I've released funds early and have received funds early.

    • someguycalledpaul on 12/12/2016 - 14:12

      Nice perspective. Kinda like a baby throwing the toys out of the pram when you dont get your own way.

      It's an interesting position to be in - seems its all about the warm and fuzzys "its good will", "good relationships" or this.

      • JimB on 12/12/2016 - 15:08

        It's just common courtesy.

        Give and take.

  • airzone on 12/12/2016 - 14:19

    They can also buy a deposit bond. I have done this before so that I could keep my cash accessible.

    I find it reasonable to ask they cover any additional costs in relation to insurance, and in their position, paying $150 to gain access to a deposit is cheap (since a bond would possibly be double).

  • Zarcady on 12/12/2016 - 14:22

    Actually I have a different experience.
    I was looking at buying a property with 3 different caveats on it from different parties. I have paid the deposit with a financial clause and got a letter from them asking to release the deposit early, which I refused because I felt uneasy.

    Turns out after some digging, a granny flat out the back was under council notice (which the real estate agent tried his very best to hide and once he was confronted with it, tried to be very obscure and dodgy about it) and if I took over the property, I was going to see the repercussions of that council notice so I invoked financial clause and got my deposit back.

    So while you can leverage this and negotiate for something in return, unless you absolutely going ahead with it, might want to have a long think about it.

    • t_c on 12/12/2016 - 14:49

      What do you mean with regards to financial clause, and was the granny flat needing to be demolished?

      • Zarcady on 12/12/2016 - 14:51

        I meant subject to finance. I believe the council would either have ordered for it to be made to comply with the current standards, fined me, or ordered for me to demolish it.

        • t_c on 12/12/2016 - 15:01

          How does subject to finance get you out of that, isn't subject to finance relate to the bank approving your loan only?

        • Zarcady on 12/12/2016 - 15:17

          @t_c: I got my bank to send me a letter of rejection and used that to get out of the contract

        • theguru1 on 13/12/2016 - 07:13

          @Zarcady:
          The Se27 doesn't operate if the contract is still conditional.eg Finance not approved.

        • Zarcady on 13/12/2016 - 09:13

          @theguru1: Well all I had at that stage when they requested for the early deposit release was a pre-approval letter. They had drafted 6 pages worth of special conditions into the contract and everything was pretty obscure. Maybe nothing came of the council notice in the end as it was sold for the same price that I offered about a month later, but I wouldn't know and at the time, there was alot of red flags that made it uneasy for me to proceed with the purchase.

  • theguru1 on 13/12/2016 - 07:17
    +1

    Unless you have a valid reason to object to the release of the deposit after the timefrane in the notice it would generally be released then. Your signature just makes it earlier.
    The contract will be unconditional and you are obliged to pay anyway. If you pulled out of the contract the deposit would be applied against money you owe.

Login or Join to leave a comment
Login Join