When it comes to purchasing property, buyers generally have to pay a deposit of approximately 10% of the property’s total price. This deposit is typically held by a middle person, such as a real estate agent or conveyancer, who will protect the interests of the buyer and the seller in certain situations.
For instance, if the buyer decides not to purchase the property, the deposit can be given to the seller in some circumstances to pay for their time spent trying to sell the home. On the other hand, if the deal goes through, the deposit is given to the seller minus any fees.
That being said, the deposit is not generally accessible until the deal is over, whether it succeeds or not. However, there are ways to access it much earlier, and here is how to do it:
The Section 27 statement
Also known as “Early Release of Deposit Authority,” the Section 27 statement under the Sale of Land Act 1962 allows the seller to ask for the deposit to be released to them before the sale is settled.
Keep in mind that this document does not guarantee access to the deposit. What it does do is ask for permission from the buyer to give the seller the deposit earlier. As such, this document will only fully work if both the seller and buyer agree to release the deposit. In many cases, the seller will kickstart the action, while the buyer will either accept or deny the request as they see fit.
When to utilise the Section 27 statement
Even though there is no guarantee that the Section 27 statement will give the seller access to the deposit, it still pays to know when to do it.
When asking for the early release of the deposit, you have to consider some factors to increase the chances of success. For instance, the buyer has already accepted the title to the property, the buyer has given a notice to the seller that they will agree to the Section 27 statement, or that there are no hindrances in the title transfer.
Note that there are many other factors the buyer may consider, and even then, there is still no guarantee that they will agree to release the deposit early unless they feel entirely safe to do so.
In summary, if a seller wants to access the deposit much earlier before settlement, they will have to utilise the Section 27 statement. This document asks the buyer to release the deposit earlier, although there is no guarantee that this will happen.
That being said, if you are a seller and want to access the deposit early, be sure to help the buyer understand why it is safe for them to release the deposit early. If you are having trouble utilising the document, reach out to professional property lawyers to assist you. They will help you craft proper and accurate documentation to ensure the buyer does not terminate the contract and is more likely to accept the deposit’s early release.
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