Section 27 - Early Deposit Release - Vendor wants us to sign.

[nickle730]

When we purchased our current home, the vendors requested that we release the deposit. Our conveyancer did lodge a caveat against the property to protect our interests and also confirmed that the balance of the purchase was enough to discharge the mortgage held on the property. On the day of settlement, there was a mix up with the paperwork (by the vendors conveyancer) and settlement was delayed by 3 days (Friday settlement now Monday).We had removalist at our old property at 7am for settlement at 1 pm and supposed settlement of the new property at 2 pm. We were not told of the delay until 2.15pm when the mistake with the paperwork was discovered. Our belongings were all on a truck to be delivered to the new property - 20 minutes down the road - but we were now left with no where to go. We had 3 kids, including a newborn, and truck full of stuff. We had nothing to get us through the weekend in a hotel, no clothes, toiletries... everything packed in the truck! The vendors, despite their own conveyancer's advice to the contrary (and our conveyancer's absolute surprise!), allowed us to move into our new home as planned on Friday afternoon and settlement went ahead on the Monday. On speaking to the vendors, they made it clear that our willingness to accommodate their needs by releasing the deposit had a strong influence on their decision to allow us to move in as planned. Sometimes, doing the right thing by someone else - whilst doing all you can to protect your own interests - pays off in the end. I think they call it karma!

[Beach Mama]

Nickle we had a licence agreement with a purchaser once, we let them move in for a week before settlement, in effect they rented from us for that week, as settlement had been delayed by their bank for 6 weeks at that point and they had nowhere to go. Sometimes crap,happens!

[misty]

I would never release a deposit before settlement. Seen it go wrong too many times. If the vendor need the deposit for another purchase they can apply at the bank for a deposit bond in its place. If they want the money for 'other' things, then that is a clear red flag and an absolute 'no'.

[Astrid]

I would never release a deposit before settlement. Seen it go wrong too many times. If the vendor need the deposit for another purchase they can apply at the bank for a deposit bond in its place. If they want the money for 'other' things, then that is a clear red flag and an absolute 'no'.

Wow really? As someone who has been on both side of a section 27 and was not up to anything dodgy, then that statement could be taken the wrong way.

[misty]

I would never release a deposit before settlement. Seen it go wrong too many times. If the vendor need the deposit for another purchase they can apply at the bank for a deposit bond in its place. If they want the money for 'other' things, then that is a clear red flag and an absolute 'no'.

Wow really? As someone who has been on both side of a section 27 and was not up to anything dodgy, then that statement could be taken the wrong way.

I'm sorry I don't understand how my statement could be taken the wrong way???
I 'stated' my position - I would never release early. I didn't make any comment (judgmental or otherwise) about people who do choose to release early. They can do what they want; I personally would not take that risk.
I stated that I have seen it go wrong too many times. I have. I try to learn from others mistakes, and I have seen this mistake (in my opinion) happen time and time again. It doesn't mean that it is 'always' going to create issues, but it does mean the risk is real and I chose not to take that risk. Others may choose differently, but that is their choice and their risk to take.
Personally I am not do much worried about being 'swindled' (although that too is a risk), I am worried about genuine, reasonably likely circumstances whereby the deposit is spent and settlement is unable to occur. Settlements are delayed and cancelled at the last minute all the time for a LOT of reason (the financial institutions being a huge factor in this). I haven't even 'blamed' vendors for 'asking' for this favour. As a vendor they are in the stronger position and the risk isn't really with them. If they have a buyer who is willing to release early, then they would be silly not to ask - it is in there interests to ask. But as a buyer, no. I would never release early.

For me, buying real estate, whether as a personal residence or an investment, should be approached as a business decision and risks should be factored and mitigated as much as possible. It is amazing how easily even the simplest real estate transaction can be derailed.

[Cassius2]

thank you all so much for your replies...

...but now i am even more conflicted

the nice and accommodating part of me just wants to sign off on it (TBH they are asking me to do it almost daily...i am not kidding!),

on the other hand i am uneasy as they are really scrabbling for cash as they are moving OS (for example we are also buying some of the furniture off them for our convenience and their cash flow lol).
the bit that makes me really really nervous is that that house will be vacant for a few months and i am just worried about it not being lived in and us not living in the same town (not being able to 'check in' on the place ITMS).

argh! i am so confused! still waiting on our lawyer to send it all through to us. he recommends to not do it (to keep our interests as numero uno) but does not see any financial red flags that would outright signify to say 'no'.

[Amity]

In those circumstances I wouldn't do it.

[Amaunet]

When is settlement? Are they moving before or after? I'd worry they'd take your deposit, move OS and cancel settlement!

[LimeSlice]

I am not sure I would be signing it if they were moving overseas prior to settlement. The helpful part of m would want to help, but I know how hard it is to get things that actually belong to you back from someone in this country, let alone having to chase people around the world, should something go wrong.

[Rowellen]

Way too risky IMO. I wouldn't do it. TBH I wouldn't bend on any contract conditions. I have been burnt once before (with the finance clause not releasing a deposit early). It all worked out fine but the stress was horrible and I wish I had never agreed.

[Artechim]

If they are moving overseas they may need the cash in account to show immigration they can support themselves. But whatever the reason, it isn't really your problem. Besides the warm fuzzies, you have nothing to gain. But if the sale failed for some reason, you have something to lose. That said, I would have trouble saying no to what is most likely a genuine and reasonable request.

[LionsandBears]

I'm not up on the legalities of these things, but would it be appropriate to agree to release the deposit, if they knock some mullah off the price?