When Stupidity Has Consumed Real Estate
Victoria’s latest property reform might be one of the biggest examples of fixing something that wasn’t broken.
I’ve spent over 26 years in the property industry. I’ve worked in conveyancing, negotiated hundreds of property transactions, and helped buyers, sellers and investors navigate incredibly complex situations.
So, when I read that the Victorian Government is proposing to repeal Section 27 of the Sale of Land Act, I couldn’t help but ask one simple question: Why?
Apparently, it’s all about “consumer protection.” But after reading the reforms, I can’t help wondering whether we’ve actually made property transactions more complicated, more expensive and more uncertain for everyone involved.
What Section 27 Actually Did
It wasn’t a loophole. It wasn’t some cowboy process. It was a legislated framework with built-in consumer protections.
If a vendor wanted access to their deposit before settlement, they couldn’t simply ask for it. They had to prove they could settle, disclose the amount owing on their mortgage, provide evidence of their secured debt, and allow the purchaser time to object. The purchaser’s solicitor or conveyancer reviewed the information. If the numbers didn’t stack up, the money stayed exactly where it belonged—in trust.
It wasn’t perfect. But it was transparent, consistent, and everyone understood the rules.
What’s Replacing It?
A Special Condition. That’s it.
Instead of a uniform legislative process applying across Victoria, parties can now negotiate an early release of the deposit through the contract of sale. Sounds simple—until you actually think about it.
If there is no legislated Section 27 process, will buyers still receive proof of the vendor’s mortgage? Will they receive evidence the vendor has sufficient equity? Will they know whether the vendor is actually capable of settling? Or are they now expected to sign a Special Condition without the statutory disclosure framework that previously protected them?
Because the legislation removes the process, it doesn’t replace it with another mandatory disclosure regime. So much for “consumer protection.”
Homeowners Are About to Feel It
For decades, many Victorians have sold one property and used their deposit to secure the next. It kept families moving, reduced the need for bridging finance, and reduced stress.
Now, unless a purchaser agrees to a specially drafted contractual clause, that money generally stays locked away until settlement.
Has the Government just made moving house harder for ordinary Victorian families?
Buyers Aren’t Necessarily Better Off Either
Ironically, the reforms supposedly designed to protect buyers may leave them with even greater uncertainty.
Instead of relying on one clear legislative process, every solicitor will likely draft different Special Conditions. Every contract could look different. Every buyer will need to understand different wording.
Consistency has disappeared. Confusion has arrived.
More Risk for Real Estate Businesses
Real estate agencies are small businesses. They pay staff every week, as well as fuel and vehicle running costs, marketing, administration, trust account audits, rent, insurance and technology. They carry all those costs long before settlement.
Under the reforms, real estate businesses can no longer access their commission from an early released deposit before settlement. So, if the vendor has already received the deposit, what guarantees the agent gets paid?
The agency would still have contractual rights under its authority agreement. But instead of being paid from funds already held in trust, the agent may now find themselves chasing payment after months of work.
The Government has effectively shifted the credit risk from the trust account onto small businesses. Again, how does that improve the property market?
Who Exactly Benefits?
The irony is hard to ignore. The previous Section 27 process required vendors to prove their financial position before obtaining an early release. The Government says the process was confusing. So instead, they’ve abolished it and replaced it with contractual negotiation.
- Removed a consistent statutory framework.
- Created uncertainty about what information buyers will receive.
- Made it more difficult for homeowners to buy their next property.
- Increased reliance on bridging finance.
- Transferred cash-flow risk onto thousands of Victorian real estate businesses.
I’m genuinely trying to understand: who exactly benefits?
Because from where I stand, this feels like legislation written by people who understand policy—but not necessarily how property transactions actually work.
Consumer protection is important. Nobody disputes that. But good legislation should solve problems without creating three new ones.
Sometimes the smartest reform isn’t replacing a system. It’s improving the one that already works.
Unfortunately, this doesn’t feel like progress. It feels like complexity wearing a consumer protection badge.
About the Author
Shannon Koetsveld has more than 26 years of experience in the property industry, including conveyancing and negotiating property transactions. Shannon helps buyers, sellers and investors navigate complex property matters with practical insight and experience.
To contact Shannon Koetsveld, click here.