Real estate agency fined after $220,000 taken from clients (Austpride Pty Ltd / Real Estate Masters)
Clients of a Perth real estate agency which has now closed had more than $220,000 of their money taken from the agent’s trust account resulting in the company being fined $7,500 by the Perth Magistrates Court and ordered to pay costs of $1,237.50.
Austpride Pty Ltd (in liquidation), formerly trading as Real Estate Masters of Cannington, was convicted on 24 August 2018 of 12 charges related to payments amounting to $220,742 being made from the agency’s trust account to persons not lawfully entitled or authorised to receive the funds, in breach of the Real Estate and Business Agents Act. Three further charges related to failure of the agency to properly reconcile their main trust account for the months of October, November and December 2015.
The 12 withdrawals from the trust account occurred over a four month period from August to December 2015. Three of the withdrawals were paid into the credit card accounts of the wife and another family member of the agency’s ‘manager’. The ‘manager’ is facing separate legal action.
Magistrate Walton noted that, although the company was now in liquidation, general deterrence was of the utmost importance as the misuse of trust account funds was a serious matter involving a betrayal of client and community trust.
The Magistrate stated that in this case “it was not a one-off offence, but a continuing pattern of behaviour and sustained deceit”.
So far Consumer Protection has paid out 41 claims totalling $133,559.25 from the Fidelity Guarantee Account related to the financial failure of Austpride Pty Ltd/Real Estate Masters. A further 17 claims amounting to about $150,000 have been received and are being processed.
Commissioner for Consumer Protection David Hillyard said actions of the agency and its ‘manager’ were, in effect, stealing.
“If it weren’t for the ability of the clients to make a claim on the Fidelity Guarantee Account, there would be many people left out of pocket, some being strata bodies representing the owners of numerous properties the agency was managing.
“I echo the Magistrates comments that this case could seriously undermine public confidence in the real estate industry and shows the dangers of money held in trust being used for purposes other than what the funds were intended.
“These funds are being held on behalf of clients and agents are required to ensure that their business practices protect the money from theft or misuse. Unauthorised use of the trust account funds will always be discovered and offenders will face the full force of the law.”
More information on the obligations of real estate agents, sales representatives and property managers is available on the Consumer Protection website: www.consumerprotection.wa.gov.au or enquiries can be made by email firstname.lastname@example.org or by calling 1300 30 40 54.
Information on the Fidelity Guarantee Account is also available online.
Media Contact: Alan Hynd, (08) 6552 9248 / 0429 078 791 / email@example.com