Agent suspended for using trust funds to pay tax debt (Ian Hugh Sargent / WA Prestige Properties)
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The licence of a Subiaco real estate agent has been suspended for nine months by the State Administrative Tribunal (SAT) after funds from the agency’s trust account were indirectly used to pay a tax debt.
Zinzan (WA) Pty Ltd, trading as WA Prestige Properties, and sole Director and licensee Ian Hugh Sargent were reprimanded by the SAT, with the nine month suspension beginning today (1 June 2016).
In May 2012, Mr Sargent transferred $75,000 from the agency’s trust account into the agency’s operating account. On the same day, $71,321 was withdrawn from the agency’s operating account to pay a debt to the Australian Taxation Office.
The funds used included $50,000 that had been paid to the agency in June 2011 as a deposit related to an offer to buy a Subiaco property and were equivalent to the commission that would have been owing to the agent upon settlement. However, the sale did not go ahead and the offer was withdrawn.
The SAT found that the agency had contravened the Real Estate and Business Agents Act by receiving a commission prior to settlement of the property, making an unauthorised withdrawal from their trust account and paying trust account funds to a person not lawfully entitled to receive them.
The SAT found Mr Sargent had contravened the Code of Conduct for Agents and Sales Representatives by failing to act fairly and honestly. The tribunal took into consideration that the withdrawal was an “isolated event” and the agent had not previously been subject to any disciplinary proceedings.
Acting Commissioner for Consumer Protection David Hillyard said this was a serious breach of the law with serious consequences for the agent and his business.
“These funds were held in trust on behalf of the buyer but the agent betrayed that trust and broke the law by using the funds for other purposes other than for the proposed property transaction,” Mr Hillyard said.
“Real estate agents who illegally pay commissions to themselves prior to settlement are playing with fire as these sales can often fall through. Also, agents should never use trust funds to pay for operating costs in their business and regular audits will eventually uncover any discrepancies.
“The ultimate consequence of such actions is the suspension or cancellation of the agency’s licence which can have devastating economic, personal and reputational impacts on the agent while unfairly affecting those who may work for them.”
More information on the obligations of real estate agents, sales representatives and property managers is available on the Consumer Protection website: www.commerce.wa.gov.au/cp/realestate or enquiries can be made by email: firstname.lastname@example.org or by calling 1300 30 40 54.
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