When you sign a property contract in Victoria, one of the first things you\'ll do is pay a deposit usually around 10% of the purchase price. But here\'s the crucial question that most buyers and sellers never ask: Where does that money go, and who protects it? The answer lies in Section 24 of the Sale of Land Act 1962 (Vic), a piece of Victorian property law that\'s absolutely fundamental to keeping your deposit safe throughout the conveyancing process.

 

At MKJ Conveyancing, we handle Section 24 deposit management every single day. We\'ve seen transactions run smoothly because deposits were managed correctly, and we\'ve also seen deals complicated when stakeholder arrangements weren\'t understood. In this guide, we\'ll break down exactly what Section 24 means, why it matters to you, and how our team ensures your deposit is protected from contract to settlement. 

 

What Exactly is Section 24?

Section 24 of the Sale of Land Act 1962 (Vic) is the legislation that governs how property deposits must be held during a real estate transaction. In simple terms: your deposit cannot go directly to the seller. Instead, it must be held by a neutral third party called a stakeholder until specific conditions are met.

According to the law, a deposit can only be held by one of three types of stakeholders:

 

 A legal practitioner (solicitor)

 A conveyancer (like our team at MKJ Conveyancing) An estate agent

The stakeholder holds your deposit in trust, meaning it belongs to neither the buyer nor the seller until the transaction reaches the right point. This is the key protection that keeps everyone honest and your money safe.

 

Why Does This Matter to You?

The beauty of Section 24 is that it creates a neutral holding arrangement that protects everyone in the transaction but in different ways depending on which side you\'re on.

If you\'re the buyer: Your deposit doesn\'t go straight to the seller, which means there\'s no risk that the vendor will spend it before settlement. If the sale falls through whether due to finance issues, a failed inspection, or other problems your deposit is safer because it\'s been held by a regulated professional, not in the seller\'s bank account.

If you\'re the seller: You know the deposit is being held securely by a regulated professional under strict compliance requirements. There\'s no risk of loss, theft, or mismanagement. You can have complete confidence that when settlement arrives, those funds are accounted for and ready to be applied.

For Victoria\'s property market: Stakeholder arrangements maintain integrity and public confidence in the conveyancing system. Buyers and sellers know the rules are fair and enforced.

 

How Are Deposits Actually Held?

This is where trust account requirements come in. Every stakeholder whether an estate agent, conveyancer, or solicitor must hold deposits in a regulated trust account at an authorized bank, credit union, or building society.

These aren\'t ordinary business accounts. They\'re subject to strict rules:

 

 The funds must be kept entirely separate from the stakeholder\'s personal or business money , The account is audited regularly by independent external auditors

  Detailed records must be maintained showing exactly whose money is in the account and why

Deposits must be deposited within 1-3 business days of receipt (depending on distance to a bank)

Interest earned on deposits may belong to the stakeholder or be donated to law society charities, depending on the amount and duration

At MKJ Conveyancing, our trust account is maintained to the highest standards. We undergo regular independent audits, maintain detailed compliance records, and ensure that every client\'s deposit is accounted for precisely. You can have absolute confidence that your money is held securely and lawfully.

The Game-Changer: Section 24(2) and Deposit Transfers

Here\'s where things get interesting. Section 24(2) allows deposits to be transferred from one stakeholder to another. This is one of the most important and sometimes misunderstood parts of the law.  

Under Section 24(2), a deposit can be transferred from: 

One legal practitioner, estate agent, or conveyancer to another legal practitioner, estate agent, or conveyancer acting for the vendor; OR

From the vendor themselves to a legal practitioner, estate agent, or conveyancer acting for the vendor.

 

Why Would You Transfer a Deposit?

Let\'s walk through a practical example of how this works: 

The scenario: You (the buyer) sign a property contract and pay your deposit to the real estate agent. The agent holds it in their trust account as stakeholder. Everything is secure. But then, once contracts are exchanged, the seller engages a conveyancer let\'s say MKJ Conveyancing to handle the legal side of the sale.

At this point, the vendor\'s conveyancer may request a Section 24 transfer. This means the deposit is moved from the agent\'s trust account to the conveyancer\'s trust account. The deposit continues to be

held as stakeholder money it never loses its protected status.

 

Why does this happen?

The conveyancer needs the deposit readily available to coordinate with mortgage payouts and other settlement funds

 The deposit may need to be applied to pay the vendor\'s mortgage or other secured debts

Moving all settlement funds to one trust account makes settlement faster and more efficient,  It centralizes fund management and reduces the number of stakeholders involved

The critical point: the deposit remains protected under Section 24 no matter how many times it\'s transferred. It doesn\'t lose its stakeholder status. It must continue to be held in a trust account, and it cannot be released until settlement conditions are met.

 

What Happens at Settlement?

Understanding the full journey of your deposit helps explain why Section 24 is so important.

 

Before settlement:

You (the buyer) pay the deposit to the estate agent, who receipts it and deposits it in their trust account within 1-3 business days

The vendor engages a conveyancer, and a Section 24 transfer may occur

Your conveyancer and the vendor\'s conveyancer exchange correspondence confirming all conditions are in order

Settlement statements are prepared showing how your deposit will be applied

On settlement day:

Both conveyancers confirm to the stakeholder that all conditions have been met

The stakeholder releases the deposit (minus any agent commissions and deductions)

Your deposit is applied as a credit toward the purchase price

Your lender transfers the remaining balance

The transfer of ownership is registered with the