Trust account operations in management rights.

 

Real Estate Trust Account Licensees not only handle money on behalf of property owners but also need to remain compliant under the Act on daily basis.
The Property Occupations Act commenced in December 2014, since then we have observed a number of common contraventions licensees have trouble with. This month we cover some of these areas and provide some tips for you to avoid potential contravention and penalties.

• Licensee owning a property in the complex and running it through the trust account
• Correct details not on the trust account receipts
• Finalising end of month before the actual end of month

 

Licensee owning a property in the complex and running it through the trust account
When a licensee owns a property in the complex they manage and rent it out, some of the time the manager will utilise the trust account and software package to manage rent receipts for their unit.  This practice is prohibited under the Act.
Licensee’s Trust accounts should only contain transactions on behalf of an owner with a signed appointment. The transactions of the licensee owned unit is considered non-trust money. To avoid contraventions the licensee should operate all transactions for their unit through an account other than your trust account and remove this ledger from your software package operation.
Act Reference – Section 18 of the Agents Financial Administration Act 2014 – full Act: https://www.legislation.qld.gov.au/LEGISLTN/ACTS/2014/14AC018.pdf

Correct details not on the trust account receipts
The Trust Account Receipt form must be used when receipting trust money.  With the new legislation there have been some additions to these forms licensees should be aware of.  Any system auto-generated forms should be reviewed to ensure correct details are on the receipt form.  Older versions of trust account software will not have these changes and in most cases an update to your software will be required.
Regulation 9 of the Agents Financial Administration Regulation 2014 listed out the requirements in the trust account receipt form. You can follow this link for full Act: https://www.legislation.qld.gov.au/LEGISLTN/SLS/2014/14SL246.pdf

Below are some mistakes we commonly observed:

• Agent’s licence number not correctly shown;
• The date –
  • the trust money was received not shown; and
  • the process date of the receipt not shown;
• The name of the person completing the receipt form not shown.

Finalising end of month before the actual end of month
When it comes to end of month, licensees should always include all transactions on the last day of the calendar month, then perform the EOM procedure within the first five days of the following calendar month.
Even if the last date of month falls on a public holiday or non-business day, and it is unlikely there will be further transactions in the trust account, licensees must still perform the EOM within five days after the end of the month.
Act Reference – Regulation 17 of the Agents Financial Administration Regulation 2014 – full Act: https://www.legislation.qld.gov.au/LEGISLTN/SLS/2014/14SL246.pdf

To find out more, please contact our office or your audit team member.