Agent fined for illegal trust account withdrawals

Agent fined for illegal trust account withdrawals

18 April 2016 by James Mitchell 2 comments

A licensed real estate agent has been reprimanded and fined over unauthorised withdrawals from a trust account used in the management of a property in Forrestdale, Western Australia.

Atul Kapoor, trading as Harcourts Elite Real Estate of Canning Vale, was fined $3,000 by the State Administrative Tribunal (SAT). 

According to a statement from the Western Australia Department of Commerce, Mr Kapoor had also received management fees without having a valid appointment to act as a property manager. The SAT ordered him to also pay costs of $500.

“In presenting the new property management agreement to the owners following the purchase of another agent’s rent roll, Mr Kapoor did not receive a signed agreement returned from the owners of the Forrestdale property,” according to the statement.

The Department of Commerce noted that between November 2012 and July 2013, Mr Kapoor received property management fees totalling $360 when no properly executed management agreement was in place. Further, contrary to the owners’ request, Mr Kapoor had withdrawn $1,703 funds from the trust account to pay for maintenance on the property.

Mr Kapoor admitted that he breached the Real Estate and Business Agents Act by accepting property management fees while not having a valid appointment; failing to act in accordance with the instructions of the owners; and failing to exercise due skill, care and diligence by paying an invoice from the trust account without first ascertaining that the invoice related to the managed property.

Acting Commissioner for Consumer Protection David Hillyard said it is a serious offence for an agent to act in defiance of the owners’ wishes relating to the use of trust account funds.

“Agents are breaching the trust of owners if they ignore instructions and make unauthorised deductions from their trust account,” Mr Hillyard said.

“While the funds may be held in a trust account operated by the real estate agent, the funds do not legally belong to the agent and should not be disbursed without the authorisation of property owners. Withdrawals should definitely not be made in defiance of the owners’ instructions as happened in this case.”

Mr Hillyard said agents face serious consequences if they are found to have failed to properly administer their trust accounts in strict accordance with the law.

“Anyone who has any evidence of the misuse of trust money by agents is urged to contact us immediately so an investigation can be carried out and appropriate action can be taken,” he said.

[Related: Real estate boss pleads guilty to fraud]

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