Powered by MOMENTUM MEDIA
realestatebusiness logo
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

news image

Clearance rates improve across lower auction volumes

August 03, 2020Emma Ryan

Preliminary figures show improved clearance rates across the combined capital cities for the week ended 2 August. ...

REB_top100agents
top 10 agents

1

Alexander Phillips

Year of Experience: 20

Support Staff: 3

Residential Properties Sold: 215

Total Value of Residential Properties Sold:

$ 522,477,791

VIEW COMPLETE REPORT

Have you experienced sexual harassment or bullying in the workplace?

Yes, I've been the victim of sexual harassment (15.8%)
Yes, I've been the victim of workplace bullying (21.1%)
No (63.2%)

Total votes: 19
The voting for this poll has ended on: April 30, 2020
TECH MARKETING SALES BETTER BUSINESS PROPERTY MANAGEMENT
AshFarrugia 850x400 march2019 New feature ‘to take property matching to the ne ...

ActivePipe has launched a new feature which aims to clear the way for a near fully automated service. ...

sydney street cbd reb Prop-service provider closes strategic funding rou ...

An Australian property service and technology provider has closed a deal worth $3 million, further cementing its status ...

Openn Negotiation NZ reb Real estate platform broadens national scope

A local real estate sales platform has expanded its horizons to Australia’s easterly neighbour. ...

online house buying reb Agents urged to upskill bidders and vendors on rea ...

With virtual online auctions in full steam ahead during the pandemic, one company is encouraging agents to embrace tec ...

Tom Panos 310720 What’s Making Headlines – The week commencing ...

What’s Making Headlines is your new source for all the very latest in Australian real estate news. ...

Kate Smith Web What competitive sport and real estate have in com ...

Kate Smith developed a love of real estate while working as a receptionist at her mother’s agency, Harcourt Smith, whi ...

Tom Panos Live 240720 What’s Making Headlines – The week concluding ...

What’s Making Headlines is your new source for all the very latest in Australian real estate news. ...

Michelle Stephens WEB Looking after clients’ assets as well as their h ...

In this episode of Secrets of the Top 100 Agents, host Grace Ormsby is joined by the REB Awards 2020 Sales Agent of the ...

Tom Panos 310720 What’s Making Headlines – The week commencing ...

What’s Making Headlines is your new source for all the very latest in Australian real estate news. ...

Kate Smith Web What competitive sport and real estate have in com ...

Kate Smith developed a love of real estate while working as a receptionist at her mother’s agency, Harcourt Smith, whi ...

Tom Panos Live 240720 What’s Making Headlines – The week concluding ...

What’s Making Headlines is your new source for all the very latest in Australian real estate news. ...

Michelle Stephens WEB Looking after clients’ assets as well as their h ...

In this episode of Secrets of the Top 100 Agents, host Grace Ormsby is joined by the REB Awards 2020 Sales Agent of the ...

Positive Mindset in Business reb The impact of a positive mindset in the business o ...

Let’s be real: running a business or an office is stressful. Here’s a quick rundown of some insights on keeping yo ...

Cameron Black reb Lies and statistics: Has the property market actua ...

It seems like there has been a huge change of sentiment in the last month as a confluence of factors has come together t ...

short 850x400 june2019 How to get that big win

Getting a big win is more than just sales. It involves strategic planning and setting goals, according to real estate bu ...

MeganSmith 050719 cropped Ray White’s Megan Smith sells $14m property in B ...

Ray White Balmain sales dynamo Megan Smith has sold one of the most expensive houses in Australia this year, with the pr ...

client agent buyer reb Australian property proves popular with British bu ...

COVID-19 hasn’t dampened international interest in Australian property, with the Brits proving Down Under is still in ...

Sharon Fox Slater reb Weather watch: Winter-proofing rentals

Wet and windy conditions can wreak havoc on rental properties. Each winter, insurance claims for water damage spike as ...

young family reb Australian households comfortable about their fina ...

Government lifelines, including the JobKeeper and JobSeeker payments, are having an impact, with more Australians feelin ...

sydney suburbs aerial reb Rental price outlook offers bad news for investors

Increases to the price of rents Australia-wide have not kept pace with general costs of living over the last five years, ...

EVENTS
REBAWARDS Listready
Real Estate Business Awards 2020

The REB Awards is the benchmark of success in the Australian real estate industry. It reflects not only the business astuteness of the country’s leading real estate operators and networks..

Learn more >
FROM THE WEB
Recommended by Spike Native Network
Do you have an industry update?
rpm logo latest

Shining the light on trust accounts

29 August 2013 Reporter

In the past few months, several real estate professionals have been caught committing trust account fraud, damaging the industry’s reputation. Residential Property Manager examines how agencies can protect both themselves and their clients from this problem

Trust account issues have emerged as a point of concern for the industry following the prosecution of several agents in Queensland for fraud.

One agency was hit with a $50,000 fine, while another real estate company and its director were fined $35,000 for illegally withdrawing money from a trust account.

In one shocking case, the Queensland Office of Fair Trading (QOFT), together with the Queensland Police Service, investigated a Brisbane real estate agent’s activities, leading to the agent being sentenced to five years’ jail for misappropriating $412,000 from trust accounts.

Advertisement
Advertisement

A QOFT spokesperson tells Residential Property Manager that the department takes breaches of real estate trust account laws extremely seriously.

“Clients entrust large sums of money to real estate agents and it is vital the public has peace of mind about the money held in trust by members of the real estate industry,” she says. “The OFT will not tolerate misuse of this money.

“The OFT has always proactively monitored property agents to check they are operating trust accounts correctly,” she adds.

The spokesperson explains that by law, each real estate trust account holder is required to have an auditor appointed to audit their trust account and the licensee is required to lodge an audit report with the QOFT each year.

“In addition, the OFT conducts regular spot checks on licensees and the operation of their trust accounts and may also investigate any complaints made concerning trust accounts,” she says.

Executive manager of policy and legal at the Real Estate Institute of Queensland (REIQ) Antonia Mercorella says the recent number of trust account prosecutions is both disappointing and concerning.

“Issues with trust accounts can [no doubt] cause very severe damage to the reputation of the agency in question ... and to some extent, it causes a level of concern amongst the community – but it’s certainly the minority,” she says.

“A majority of real estate agents are doing the right thing, but when these things get reported it can have some impact on the broader industry.”

Recent prosecutions highlight the importance of complying with legislation, she explains.

“It’s one of the most critical compliance issues of all of them because at the end of the day, money is sitting in a trust account and it’s money that’s held on trust and the law imposes very strict obligations [on agents],” she says. “It’s really important to be on your game; it’s not an area where you can afford to get it wrong. The consequences are just too serious.”

Best practice tips
Each state and territory has its own legislation, which governs how trust accounts are to be operated, and it is important that agents remain properly up to date with the laws.

Principal licensees are ultimately responsible for the money they hold in trust for consumers, but there are several steps that can be taken to prevent fraudulent activity.

The QOFT and REIQ recommend the following strategies:
1. Do not have one person solely responsible for the trust account – but do not have too many staff members with access to it either.
2. There should be distinct segregation of duties between staff members involved in the handling of accounts and banking duties and those responsible for following up outstanding rent payments and complaints by tenants and clients.
3. Principals should put checks in place to ensure trust money is banked immediately, reconciliations are conducted monthly and clients are correctly accounted to.
4. Auditors should conduct unscheduled spot checks to identify any potential issues with accounting systems.Principals should also conduct random checks from time to time.
5. Payments in the form of cash should be discouraged to remove temptation and to prevent funds from being misplaced or mixed up with other money.
6. Principals should ensure all staff are well trained in trust accounting procedures and the trust accounting systems they are using. REIQ runs specialised training courses that run through trust account management, legislation compliance and the identification of abnormalities and misappropriation.

Checking and double checking
Melbourne agency Thomson Real Estate uses three levels of checking to ensure its trust account operations are always up to date on legislation and are operating within the law.

“When the money is received by a property manager, there is a process for where it must go, so it can be checked along the way,” says Thomson Real Estate director Anthony Lee.

“There are multiple people involved in the transactions, rather than just one person who is ticking off that it’s been received into the trust account,” he explains.

At Thomson, the receptionist receives the funds, which are then double checked by a second person. The accountant will verify the balances and another party (acting on a rotational basis) will then take the money to the bank for safety and security.

The company accountant audits the accounts on a quarterly, half-yearly and annual basis to check for irregularities, omissions or errors. Once a week and at the end of the month, Mr Lee will check the accounts.

“We are very vigilant in seeing where our payments go, both to creditors and to landlords,” he says. “It’s very much a case of being on top and being involved.

“The main horror of trust accounting is when one person seems to have been almost [entirely] in control of it and if they’re dishonest, they can take advantage of the situation.”

According to Mr Lee, having more than one person capable of doing each role allows irregularities to be picked up quickly and ensures someone is able to step in when required, such as when a staff member is absent.

Ms Mercorella advises principals to look out for any strange behaviour in staff but also to pay particular attention to any complaints from landlords that they have not received their money.

Ultimately, it is about ensuring there are measures in place to prevent trust account fraud from happening in the first place.

“Be an active principal rather than leaving it to others because it’s your licence and trust account that’s on the line,” Mr Lee advises.

However, should evidence of fraud be discovered, REIQ advises agents to immediately notify their professional indemnity insurer and to contact the police or the OFT.

Shining the light on trust accounts
default
lawyersweekly logo
FROM THE WEB
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
Do you have an industry update?
REAL ESTATE BUSINESS NEWSLETTER
Ensure you never miss an issue of the Real Estate Business Bulletin. Enter your email to receive the latest real estate advice and tools to help you sell.