Jumping the gun? Release of deposits in Victorian real estate transactions
Vince Annetta, Alison Kennedy and Lucy Broughton
12 Oct 2022
Time to read: 1 MIN
A Victorian Supreme Court judgement handed down last week was the first case to consider if a contractual term requiring the early release of a deposit was in contravention of statutory provisions in Victoria.
Those entering into real estate contracts should be wary that Courts will likely strike down contractual provisions that seek to alter legislative requirements governing the early release of deposits in Victoria (GLP Batesford Pty Ltd v 68 Bridge Road Land Pty Ltd ).
In Victoria, early release of deposits is governed by section 27 of the Sale of Land Act 1962 (Vic) which, in particular circumstances, enables a vendor to provide specified information to a purchaser, and for the purchaser to indicate within 28 days whether the information is satisfactory. Only if a purchaser is satisfied with the information provided may a deposit be released before settlement.
In a recent Victorian Supreme Court case involving our litigation and real estate teams, Justice Riordan held that a purchaser was not in default of a condition in a sale contract which tried to alter the method and timing for a purchaser to provide a response to a Section 27 Statement. The condition included an obligation to respond in a particular way within five Business Days instead of the statutory 28 days.
Justice Riordan held that the condition could not operate in the absence of the purchaser’s satisfaction of the particulars provided, and in any event not before the statutory 28 day period. In this case, the purchaser had indicated that it was not satisfied with the particulars provided by the vendor, and therefore the condition did not become operative. Accordingly, a rescission notice served by the vendor based on an alleged breach of the condition was held to be invalid.
Inventive drafting seeking to alter the legislative provisions governing the release of deposits in Victoria will likely be struck down. Drafters must ensure that all substantive rights and protections conferred on purchasers under statute remain intact.
12/10/2022 7:00:00 AM
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