Agency investigated for $1m+ in missing funds

Agency investigated for $1m+ in missing funds

by Simon Parker 0 comments

A real estate agency is under investigation by NSW Fair Trading for more than $1 million in missing funds, from two different parts of its business.

The agency, Dougmal Harcourts in Warilla - which comprised sales and strata management businesses - is being investigated for $200,000 in missing funds from the firm’s trust account, along with an additional $850,000 that's unaccounted for from its strata management sinking fund pool.

Fair Trading Commissioner Rod Stowe said Fair Trading had been notified of a significant deficiency in trust accounts by the licensee-in-charge on 24 January and launched an immediate investigation. The real estate agency side of the business is now closed.

Mr Stowe said approximately $200,000 is unaccounted for in the agency’s trust account, affecting seven groups of consumers in the process of buying a property.

“Fair Trading is contacting these consumers to advise them of the situation and how they may make a claim on the Property Services Compensation Fund,” he said.

Fair Trading said the agency also manages 236 strata schemes, involving approximately 1,800 clients.

“Approximately $850,000 out of a total sinking fund pool of $4.3 million administered by the agency is unaccounted for,” the commissioner said.

“There should be no immediate impact on the day to day operations of the 236 schemes, however the loss of nearly 20 per cent of the sinking fund pool will be addressed in the course of the investigation and by the manager.”

Harcourts NSW CEO Sadhana Smiles told Real Estate Business that the investigation solely related to the real estate sales and strata management components of the Warilla-based business. This franchise had been terminated, she confirmed.

She added that the property management company that is based in the same physical premises is run as an entirely separate business, and is not being investigated.

Mr Stowe said Fair Trading had responsibilities under the Property, Stock and Business Agents Act and associated legislation, such as the Residential Tenancies Act, to protect property buyers, sellers, tenants and landlords.

“Real estate agents are in a position of great responsibility and trust and are expected to act with honesty and propriety at all times,” he said.

“Agents are expected to take their professional oath seriously and comply with laws that govern the industry, including ensuring appropriate arrangements are in place to manage clients’ money.”

Mr Stowe said claims to the Property Services Compensation Fund must be made in writing to the Fair Trading Commissioner within 12 months of a person becoming aware of the failure to account, or within two years of the date the failure to account took place, whichever period ends first.

Agency investigated for $1m+ in missing funds
lawyersweekly logo
promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2017

With a combined sales volume of over $14 billion in 2017, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
Tim Heavyside on making every situation work, no matter the difficulty

Join Tim Neary as he chats with Fletchers Victoria director and auctioneer Tim Heavyside about the importance of getting the basics right, a...

View all podcasts

How much of an influence will bitcoin and other blockchain cryptocurrencies have on the home sale market in 2018?

None, Bit-what?
A little, cryptocurrency is a fad and will fade quickly
A lot, blockchain is the new black
Do you have an industry update?