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Property manager fined for trust account mistakes

20 June 2019 Tim Neary

A Perth property management agency has been reprimanded, fined and ordered to pay costs by the State Administrative Tribunal for trust account errors and other breaches of the law.

Claremont-based Gemranch Nominees Pty Ltd, trading as TM Residential and Executive Leasing, has been reprimanded, fined $8,000 and ordered to pay costs of $2,000 for having breached the Real Estate and Business Agents Act and the Code of Conduct for Agents and Sales Representatives by failing to exercise due skill, care and diligence.

The WA government said in a statement that between May 2016 and September 2016 and on five occasions, a total of $17,882 was mistakenly withdrawn from the agency’s trust account without proper purpose or being authorised by a person lawfully entitled to the money. The funds related to properties in Dalkeith, Crawley, Mount Claremont, Scarborough and Cottesloe.

“Between July 2016 and September 2016 and on three occasions, the agency received a total of $16,840 in bond money from tenants but entered the amounts as rent in the agency’s trust account. The funds related to properties in Mount Claremont, Scarborough and Cottesloe,” the statement read.
 
“In January 2016, the agency received $1,931 from the tenant of a Claremont property but failed to enter the details in its accounts by the end of the next business day. Between July 2016 and October 2016, the agency failed to lodge six bonds totalling $26,120 with the Bond Administrator within 14 days, relating to properties in Mount Claremont, Cottesloe, Burswood and Scarborough.

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“On two occasions in July 2016 and October 2016, the agency charged the owners of a Burswood property a property management fee of 6.6 per cent when the agreement stated a fee of 6 per cent.”
 
Submission

TM Residential and Executive Leasing made a submission to the SAT, which accepted that the breaches were due to error and there was no evidence of dishonesty, no client suffered any losses, funds mistakenly withdrawn from the trust account were immediately repaid once the errors were detected, and that the agency voluntarily reported the breaches to Consumer Protection.

It also made accepted submissions that administrative procedures at the agency were altered to ensure the breaches do not re-occur in the future and that audits in the 2017–18 and 2018–19 financial years found no issues in the accounting.

Commissioner for Consumer Protection David Hillyard said that, while there was no dishonesty involved in this case, it was careless behaviour by the agency.

“How licensed real estate and property management agencies handle funds being held in trust for owners and tenants is strictly controlled by laws that are designed to properly account for the funds and aim to protect the agency’s clients,” he said.

“Agencies need to prevent accounting errors by strictly adhering to the laws that regulate the operation of trust accounts and financial transactions such as lodging bonds. Agents should regularly review their business practices to ensure they are working and they are providing their staff with adequate training as well as putting checks in place to make sure staff are doing the right thing.

“Failure to comply may result in disciplinary or prosecution action being taken and confidence in their agency and the industry in general being undermined.”

Property manager fined for trust account mistakes
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