The recent revelation that the CEO of a national estate agency may have been able to use substantial trust deposits for purposes other than those intended by the depositors, has sparked a debate in the real estate sector as to whether any estate agency should be allowed to operate a trust account on behalf of clients.
Discussing this, Sean McCauley, Rawson Properties director (based in Johannesburg) said that he cannot see why estate agencies should be allowed to be in control of client trust deposits.
'In our group,' he said, 'the sale agreement specifically states that we do not hold deposit monies on behalf of clients '“ we advise putting deposits in the conveyancing attorneys trust account '“ but it has to be admitted that attorneys trust accounts have on occasion also been abused. It is time, therefore, that the whole system was reviewed'
Certain options, said McCauley, are open to those who do need a trust account. In the case of estate agents, he said, the best safeguard would be to stipulate that when the money is deposited, the client has to be given immediate proof of this '“ and that no money should ever be released from a trust account without both the clients and attorneys signatures.
Another option is that of getting a bank guarantee for the full payment due to the seller on transfer of the property. This could eliminate the need for deposits.
'The estate agency sector has tightened up its controls very noticeably in the last few years. If the trust fund system was phased out it would, in my view, be another step forward,' said McCauley. 'At a time when vastly improved qualifying criteria are set to transform the image of estate agencies, we must not have our image destroyed by financial misconduct'
For further information contact Sean McCauley on 011 463 1092 or email sean@rawsonproperties.com.
