Trust account violations may be costly!: Real estate industry bulletin issue 186
7 November 2018
Trust account violations may be costly
Consumer Protection reminds all property managers and real estate agents to follow the strict rules that apply to the handling of trust account funds following recent disciplinary actions taken by the Perth Magistrates Court and the State Administrative Tribunal (SAT).
Last month, a Noranda real estate agent was fined $800 and ordered to pay costs of $900 by the Perth Magistrates Court for two unauthorised trust account withdrawals and failing to have the account audited. This closely followed a SAT decision in which a Shenton Park property manager was fined $13,000 for making 13 unauthorised withdrawals totalling $36,290 without the knowledge of the agency’s licensee.
In June 2018, the person in bona fide control of Jim's Realty Pty Ltd was fined $5,000 and had his license and triennial certificate suspended after withdrawing $20,000 from the agency’s trust account to pay personal debts.
The use of trust account funds for other purposes, such as paying for the operating expenses of the agency, is a serious case of misconduct and breach of the law.
The sanctions imposed highlight the need for agents to abide by the strict laws that cover the operation of trust accounts. As the funds held in trust accounts are held on behalf of property owners, buyers and tenants, proper accounting procedures must be in place to protect those funds.
The Department will always identify unauthorised withdrawals and other serious misconduct in the course of the annual audit reporting program.
In the 2017-2018 financial year, Consumer Protection commenced more than 45 trust account investigations. Serious offenders can face prosecution or disciplinary action.
Read more about common trust accounting issues and how to deal with them or check out the Real estate and business agents' trust account handbook.
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