Who holds the deposit in an Australian conveyancing matter, and when can it be released?

In most Australian conveyancing matters the deposit is held in trust by the selling agent, or by a law practice as stakeholder, and cannot be paid to the vendor before settlement unless the contract or a statute allows it. MatterFirst, a legal practice management platform for Australian law firms, keeps a per-matter trust ledger for exactly this money.

That sentence is short, but almost every deposit problem a conveyancing file produces comes from ignoring one of its three parts: who is holding the money, what authority would be needed to move it, and whether the file can prove either of those things two years later when somebody asks.

The deposit is not the vendor's money yet

A deposit is paid on exchange, often ten per cent, sometimes five, occasionally a nominal sum with the balance payable later. From the moment it is received it belongs to neither party outright. It is held by a third party on terms, and the terms come from two places at once: the contract of sale, and the trust accounting legislation that binds whoever is holding it.

Those two sources can say different things. A special condition that directs a deposit somewhere the legislation does not permit is not a clever structure, it is a breach by the person who acts on it. Western Australia's regulator makes the point directly in its trust account handbook for real estate agents, describing tribunal decisions where "mezzanine agreements" purporting to release off the plan deposit money to a developer were held to breach the statute despite being written into the contracts. Under section 165(1) of the Strata Titles Act 1985 (WA), a contract term that purports to restrict or exclude the deposit holding requirement in section 163(2) "is of no effect".

So the first question on any property file is not "what does the contract say", it is "who is holding the money, and what are they allowed to do with it".

Who holds it, and what the holder must do

Four states publish current, specific guidance that a conveyancing file can be checked against. The table below states only what those regulators say on their own pages.

South Australia, Tasmania, the Australian Capital Territory and the Northern Territory each run their own agent licensing legislation, with South Australian land agents governed by the Land Agents Act 1994 (SA). We have not stated their banking deadlines here because we could not retrieve the current regulator guidance for them when writing this, and a deadline you half remember is worse than one you look up.

Two further points apply everywhere.

An interest bearing account is sometimes a right, not a favour. In Western Australia, section 68A of the Real Estate and Business Agents Act 1978 lets a party request a separate interest bearing trust account in writing, and the agent must comply where a prescribed condition is met: for a sale, where the money paid exceeds $20,000, or where the transaction is not to be settled within 60 days. The written request has to be retained for audit.

Audit deadlines are not optional and they differ. New South Wales runs an audit period ending 30 June, with audits due to the Secretary "within 3 months after the end of the audit period and no later than 30 September of that year", and requires notification within 14 days after a trust account is closed. Western Australia runs a calendar audit period, 1 January to 31 December, with the auditor required to deliver the report to the Commissioner by 31 March. A firm operating across both lodges twice a year against different clocks.

When the deposit can be released early

Early release is the single most litigated part of this topic, because it is where the vendor's cash flow meets the purchaser's security.

In Victoria the answer is changing. Early release has been governed by the section 27 procedure in the Sale of Land Act 1962 (Vic): a vendor serves a statement with prescribed particulars, and the deposit can be released only once the contract is unconditional, title is accepted or deemed accepted, and the purchaser has not objected within the statutory period. The Consumer Legislation Amendment Act 2026 (Vic) received Royal Assent on 8 September 2026 and repeals section 27, with the repeal commencing 1 June 2027. After that date, early release of a deposit requires an express condition in the contract of sale, and agents are prohibited from taking commission out of a deposit before settlement. The Act's current consolidation sits on the Victorian legislation register.

Every Victorian contract template will need review, and any matter drafted before that date but settling after it needs checking.

In the other states, early release is a creature of contract. The question to answer on the file is narrower and more practical: does the contract contain an express release clause, has the triggering condition actually occurred, and has the holder been given a direction they are permitted to act on? Queensland's guidance is a useful discipline here, because it treats "settled or terminated" as the ordinary trigger for moving money out at all.

Deposit bonds, bank guarantees and the empty trust ledger

A deposit bond or bank guarantee is not money. It is a promise by an insurer or bank to pay the deposit amount if the purchaser defaults. Nothing is received, so nothing is banked, so nothing appears in a trust ledger.

This is where files go wrong quietly. The matter has no trust balance, so the trust side of the system shows nothing to reconcile, and the instrument itself becomes a PDF in an email thread. What matters about a bond is dates and conditions: expiry, whether it covers the full deposit, whether the contract accepts it, and who holds the original. Those belong in the matter's key dates, not in an inbox. If the settlement is extended past the bond's expiry, someone has to notice before the expiry, not after it.

What the matter file has to be able to prove

Strip out the state variation and the same five facts have to be recoverable from any conveyancing file, years later:

1. The amount of the deposit, and the percentage of the price it represents.
2. Who received it, in what capacity, and on what date.
3. Which account it went into, and the date it was banked.
4. The authority relied on for any movement of it, whether a contractual release clause, a statutory procedure, or settlement itself.
5. The reconciliation showing the balance agreed with the bank at each month end while it was held.

If the deposit was a bond rather than cash, replace items three and five with the expiry date and the location of the original instrument.

How MatterFirst handles this

MatterFirst is a legal practice management platform for Australian law firms, built by North Cape Technology in Melbourne. On the trust side it provides per-matter trust ledgers, receipts, withdrawals, reconciliation and disbursement records, with a compliance review workflow covering New South Wales, Victoria, Queensland and Western Australia. Those four, not all eight jurisdictions. Matters themselves can be recorded in all eight, but the trust review workflow is scoped to the four.

The deposit specific work sits across three features. Trust receipting and the per-matter ledger hold the money and the audit trail, so the answer to "when was it banked, and into which account" is a record rather than a recollection. The obligations engine calculates key dates and cites the governing provision, which is how a deposit bond expiry or a Victorian release period stops being a diary entry someone has to remember to make. Automations run trigger, condition and action rules, so receipting a deposit can raise the next task, notify the client through the client portal, or generate a document as a workflow step.

Document AI reads the uploaded contract and extracts key terms, with custom extraction rules so a firm can define the fields it cares about, deposit amount and any release clause among them. Document generation is deterministic by default: a release notice built from merge fields and clause library entries produces the same output every time, and uses no AI balance.

Pricing is per workspace, from $199 per month with users included, and every paid plan includes the client portal, automations and a monthly AI balance in Australian dollars rather than credits. Data and AI processing run in the AWS region the firm chooses, Sydney by default for Australian firms, which is set out on the security page.

How the products compare

Facts below were taken from each vendor's own public pages on the date of writing.

Clio's Australian pages returned HTTP 403 to our requests while this was being written, so rather than repeat a third party's figures we have left those cells unverified. Check clio.com directly.

Who this suits, and who it does not

MatterFirst suits Australian firms of roughly two to twenty fee earners doing property and general practice work, that want onshore hosting, state based trust accounting and document generation they can predict. The per workspace price makes most sense to a firm with several users, since a solo practitioner is comparing $199 per month against per seat products that start lower.

It is a weaker fit in three cases. A firm whose trust compliance sits wholly in South Australia, Tasmania, the ACT or the Northern Territory will not get the compliance review workflow, because it covers four states. A firm that needs an electronic lodgement network or title search provider wired into the matter should know that PEXA and InfoTrack are listed as coming soon, not connectable today. Available integrations today are Xero, Stripe, Microsoft 365 and Google Workspace, plus a documented REST API with webhooks.

The evaluation checklist is a reasonable set of questions to put to any vendor on this, including the ones here.

Frequently asked questions

Who holds the deposit in an Australian property sale? Usually the selling agent, in that agent's trust account, under the agent licensing legislation of the state. It can also be held by a law practice or conveyancer named in the contract as stakeholder. The contract says who, and the trust legislation says what they may do with it.

Can the vendor use the deposit before settlement? Only where there is an authority for it. In Victoria that authority is currently the section 27 procedure under the Sale of Land Act 1962 (Vic), and from 1 June 2027 it must be an express condition in the contract. Elsewhere it depends on the contract containing a release clause and the triggering condition having been met.

Is a deposit paid to my law firm trust money? If a law practice receives it in connection with legal services provided to a client, yes. The Victorian Legal Services Board describes trust money as money entrusted to the law practice in the course of, or in connection with, legal services provided by the practice, which captures a deposit held as stakeholder on a sale.

What happens to the deposit if the contract falls over? That is determined by the contract and by who defaulted, not by the holder's preference. Where entitlement is disputed, the money stays in trust until the parties agree in writing or a court or tribunal orders otherwise. Queensland's guidance frames the payout trigger as the transaction being "settled or terminated".

Does a deposit bond go into a trust account? No. A bond is a guarantee rather than a payment, so there is nothing to bank. The file needs the bond's expiry date diarised and the original instrument located, which is a key dates problem rather than a trust accounting one.

Does MatterFirst handle Victorian trust accounting? Yes. Victoria is one of the four states covered by the trust compliance review workflow, with New South Wales, Queensland and Western Australia. Matters can be recorded in all eight Australian jurisdictions, but the review workflow covers those four.

The short version

The deposit is held money, not the vendor's money, until a contract term or a statute says otherwise. Bank it inside the deadline that applies in your state, record the capacity it was received in, diarise anything with an expiry, and never act on a direction the legislation does not permit, however clearly the special condition is drafted. In Victoria, put 1 June 2027 in the diary now.