Deposits and Disclosures: Navigating the Proposed Reforms to the Sale of Land Act

The Victorian Government has recently introduced the Consumer Legislation Amendment Bill 2026 (Vic) (Bill) proposing broad and significant reforms to the real estate and property sector from 1 June 2027, particularly in relation to the Sale of Land Act 1962 (Vic) (Act).

Having now passed the second reading stage, the Bill is currently before Parliament for debate ahead of its third (and final) reading in the lower house. While several procedural steps remain before the Bill  is enacted, property sector stakeholders should closely monitor its progress as the proposed reforms will impact how deposits are handled and the provision and availability of vendor statements, both of which go to the core of conveyancing practice.

Early Release of Deposit Money

Under the current framework, a deposit paid by a purchaser under a contract of sale is held by the real estate agent (or by the vendor’s legal practitioner or conveyancer) and is released at settlement. However, a vendor may seek an early release of the deposit before settlement by issuing the purchaser a section 27 statement.

The Bill proposes to repeal section 27 of the Act and replace it with new sections 26A and 26B.

Under the proposed changes:

• a deposit must not be released prior to settlement unless the contract of sale includes a special condition expressly permitting early release; and

• real estate agents will be prohibited from deducting their commission or expenses (eg. marketing or auction costs) from any deposit released early and will instead need to wait until settlement to recover those amounts.

These reforms are intended to simplify the current process and reduce risk for purchasers. In particular, they respond to situations where a vendor accesses the deposit before settlement but subsequently fails to settle, leaving purchasers in a difficult position when trying to recover their funds.

In practice, the changes will place greater emphasis on the terms of the contract. Lawyers and conveyancers will need to carefully draft and review any special conditions permitting early release of deposit and ensure that both vendors and purchasers are clearly advised of the associated risks and obligations.

An unintended consequence of the reforms may be increased pressure on vendors, particularly from real estate agents, to accept shorter settlement periods when weighing competing offers.  

Vendor Statements

When selling a property, vendors are required to disclose certain information about the property through a vendor statement (commonly referred to as a section 32 statement) which forms part of the contract of sale. Among other things, the vendor statement must include information about the title to the land, any covenants, easements or restrictions affecting the property, planning information, owner-builder warranties, and details of any mortgages or charges. At present, a signed vendor statement needs to be provided at any time before a purchaser signs the contract of sale.

The Bill seeks to create a timing obligation in relation to vendor statements through amendments to sections 32, 32K and 32L of the Act. The proposed changes would require a signed vendor statement to be made available, either digitally or in hard copy, at least 14 days before:

• an auction date;

• a fixed sale date; or

• the date a contract of sale is signed.

Failure to comply with the timing requirements may entitle a purchaser to terminate the contract of sale.

While these changes are intended to provide purchasers with a better opportunity to review disclosures before committing to a transaction and to conduct their own due diligence enquiries, they introduce a strict timing requirement that vendors and their representatives will need to manage carefully.

Vendors will need to plan key sale dates (i.e. auction or listing dates) as early as possible and communicate these promptly to their lawyers and conveyancers so that the contract of sale and vendor statement can be prepared in accordance with the prescribed timeframes.

We will continue to monitor the progress of the Bill and provide updates as it moves through Parliament. In the meantime, vendors, real estate agents and practitioners should begin considering how these proposed changes may affect their future transactions.

Vittoria De Stefano
Principal
M 0407 091 301 | T 03 5226 8520
E vdestefano@ha.legal

Madeleine Luppino
Senior Associate
T 03 5226 8564
E mluppino@ha.legal

Deeksha Kollu
Lawyer
T 03 5225 5224
E dkollu@ha.legal

This article was prepared with the assistance of Pheobe Tol, Law Clerk.