$25,000 penalty for real estate agency's 'incompetent' conduct: Real estate bulletin issue 126 (November 2016)
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AIM Realty / Aman Deep Singh
A Gosnells real estate agency described by the State Administrative Tribunal (SAT) as ‘incompetent’ has been ordered to pay a $25,000 penalty for mishandling the deposit from the sale of a property.
AIM Investments Australia Pty Ltd, trading as AIM Realty, was fined $8,000 and licensee and agent Aman Deep Singh was also fined $8,000 for breaching the Real Estate and Business Agents Act. Both were reprimanded and ordered to pay a total of $9,000 in legal costs of the Acting Commissioner for Consumer Protection.
Mr Singh helped his parents by promoting and selling a property in Gosnells that belonged to the family trust. In July 2013 a buyer approached Mr Singh at AIM Realty and, after being shown the property, agreed to the purchase.
The parties signed a contract of sale representing that AIM Realty and Mr Singh were acting as the selling agent and that the buyer’s deposit of $76,500 will be held in AIM Realty’s trust account.
When the time came to pay the deposit, Mr Singh instructed the buyer to pay the $76,500 deposit into the family trust’s bank account instead of AIM Realty’s trust account as per the contract. The buyer, who was temporarily working for AIM Realty, carried out that instruction by depositing the funds into the family trust account. The buyer had not appointed a settlement agent based on Mr Singh’s instruction.
Settlement of the property was completed in August 2013 with the $76,500 payment never being deposited into the agency’s trust account.
It is a fundamental requirement of the Act that a deposit is paid into an agency’s trust account as soon as possible so that the monies are held securely and independently. The SAT found that Mr Singh and AIM Realty’s actions breached this fundamental requirement.
Mr Singh was also found to have breached the Code of Conduct for Real Estate Agents and Sales Representatives by failing to exercise due skill, care and diligence in relation to the sale of a property.
Mr Singh claimed that it was a private sale so he was not acting as an agent, but the SAT found that Mr Singh’s conduct represented to the buyer that he was acting as a selling agent at all times.
The SAT described Mr Singh’s conduct as a serious breach of the Act, stating that where a deposit is paid directly to a vendor before settlement, it greatly increases the purchaser’s risk of financial loss in the event of a default by a seller or vendor.
The SAT noted that the company and Mr Singh had not demonstrated any remorse and stated that Mr Singh’s failure to understand their obligations under the Act demonstrated incompetency.
Acting Commissioner for Consumer Protection David Hillyard said that the agent has paid a high price for his serious misconduct in regard to this sale.
“Mr Singh has broken the law in order to give his parents, the vendors, early access to the deposit funds prior to settlement,” Mr Hillyard said.
“The purpose of the law which requires deposit funds received by a real estate agent to be paid into an agency trust account is to offer the buyer protection in case the sale falls through. Mr Singh’s actions jeopardised the rights of the buyer in this sale and he has consequently suffered a financial penalty as well as damage to his reputation in the marketplace.
“I urge all real estate agents to strictly adhere to the laws relating to the handling of their client’s money and the operation of their trust accounts, as audits conducted by Consumer Protection will likely uncover any breaches of the law and expose them to prosecution or disciplinary action.”
More information on the obligations of real estate agents and sales representatives is available from the Real Estate and Business Agents’ Trust Account Handbook.
Further enquiries can be made by email or by calling 1300 30 40 54.
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