Agents ousted after trust account misuse

Agents ousted after trust account misuse

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Two real estate agencies are being wound up after an investigation uncovered the misuse of trust accounts and the inability to operate their businesses within the Real Estate and Business Agents Act.

The businesses were nabbed by Consumer Protection in Western Australia, which has been granted supervision orders by the State Administrative Tribunal (SAT) to take control of the two Perth-based agencies.

The supervisor's duties include carrying on the activities of the agent for the purpose of winding up the agency.

The SAT recently approved an application to restrain Kurt James Wallace, trading as Scope Investment Services, from operating and for a supervisor to be appointed to administer the agency's financial affairs.

Mr Wallace, formerly of Crawford Realty Newman, won the sales award for top principal at WA’s AUSNET awards in 2012. 

Consumer Protection commenced proceedings after an investigation revealed rent money that should have been deposited in a trust account had been deposited into the agency's general account, which was not corrected.

Mr Wallace also failed to renew his triennial certificate when it expired in April this year.

Meanwhile, in a separate case, the SAT has approved an application to restrain Spirit Realty, trading as Professionals Perth, from operating and for an administer to wind up the company's financial affairs.

Consumer Protection said it appointed a special auditor to conduct a forensic examination of the agency's trust accounts, which found numerous breaches of the act.

It added that soon after the investigation had begun, the company went into voluntary liquidation, which was a significant reason in the SAT’s order that the agency was no longer capable of conducting its business after breaching the act.

Department of Commerce manager of investigation (property industry) Tim Banfield said a complaint was received containing allegations of improper accounting and the misappropriation of money.

"Any breaches of the trust account provisions are criminal breaches and any conviction of a breach of those trust account provisions results in an automatic cancellation of the agent's licence,” he told Real Estate Business.

Mr Banfield said there had been eight similar cases in Western Australia in the last decade, making it neither a rare nor a prevalent occurrence.  

"[However] it is a bit unusual to have two cases together, but it is not necessarily something we are looking at as a trend,” he said.

Commissioner for Consumer Protection Anne Driscoll said that whilst the banning of a licence is extreme, it is justified when there are grounds to believe licensed real estate agencies have misused their clients' money by failing to properly administer their trust accounts.

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