What is a Section 24 transfer?

Unless it is released to the vendor by the purchaser before settlement (section 27), the deposit paid by the purchaser under a contract for the sale of land will remain in the Agent’s trust account until settlement, after which the balance of the deposit (after the Agent has deducted their commission and expenses) is released directly to the vendor.

However, on some occasions a vendor needs the deposit to be available to them at settlement.  Reasons for this include:

1. Part or all of deposit is required together with the settlement proceeds to pay off the mortgagee and/or caveator.
2. The vendor is an executor and wishes to allocate the aggregate of the settlement proceeds and the balance of the deposit to the beneficiaries of the will.

In such cases, a transfer of the balance of the deposit (i.e. that part of the deposit that will not be retained by the Agent to pay their commission and expenses) can take place from the Agent’s trust account to the conveyancer’s or legal practitioner’s trust account in accordance with subsection 24(2) of the Sale of Land Act 1962 (Vic).  This transferred amount (“the Section 24 transfer”) is then “injected” into the settlement, as Source funds.

For more information about Section 24 transfers, please contact Glenferrie Conveyancing in Northcote on 03 9815 2351.