Deregistered Perth builder Nicheliving is being taken to the Western Australian State Administrative Tribunal over allegations it improperly released customer funds from a trust account.Â
The company, which now uses the name Australian Property Alliance, is accused of transferring $50,000 from a trust account to a builder the day after a contract was signed.
The WA Commissioner for Consumer Protection Trish Blake is taking the action for disciplinary proceedings on behalf of a customer who signed a contract with Nicheliving for a home in a strata development.
It is alleged money was released to the builder earlier than permitted under the rules.
“When a developer is selling off the plan in a strata development, the law requires that the deposits that are paid by consumers are held in a trust account and that must stay in that trust account until the strata plan for the development is registered,” Ms Blake told ABC Radio Perth.
Trish Blake says it is vital to maintain public confidence in the building industry. (ABC News: Nicolas Perpitch)
“That means that if the development doesn’t go ahead, that money is protected and those deposits can be returned to the consumers and they’re kept safe.
“What we’re alleging in this instance is that that didn’t happen.
“[We are alleging that] when it was trading as Nicheliving Real Estate, they received a sum of money from a particular consumer and they released the lion’s share of that money to the builder the day after the contract was signed.
“Then they also released what was remaining after the buyers had actually cancelled the contract,” Ms Blake alleged.
Breach of trust claim
The rules prescribe when money can be released to a builder from a trust account, and an earlier payment is a breach of those rules.
Ms Blake said while the affected customer had recently been repaid their $50,000, the commission took all alleged breaches of trust account administration laws seriously.
“What we’re alleging is that the allegations include unauthorised withdrawals of client funds, and because they were also acting as real estate agents, the real estate agent’s code of conduct also applies to their behaviour.
“So, we’re also alleging that they’re failing to meet the standards of honesty, due care, and diligence and skill.”
Trust accounts held by developers and real estate agents are audited annually, and Consumer Protection staff comb through the audit reports checking for any irregularities.
Ms Blake said this was vital to preserve consumer trust in the building industry.
“When you’re buying a house and land package off the plan, or you’re investing in an apartment building that’s yet to be built, that’s a huge amount of trust for a consumer in that developer, in that builder, that that development will go ahead and that they will take care of your money.
“As consumer protection, we need to protect that trust in that industry, because if we don’t have trust in the industry, then consumers won’t sign up for these contracts, and we need them to.
“We need consumers to trust builders so that they pay to have homes built. We have a housing crisis.”Nicheliving problems continue despite deregistration
In November last year, the Perth homes of company directors Ronnie Michel-Elhaj and Paul Bitdorf were raided by the Australian Securities and Investments Commission (ASIC) and the Australian Federal Police (AFP).
A third property was searched in Hobart.
The ABC understands laptops and phones were seized during the raid.
ASIC confirmed that investigation was ongoing.
Ronnie Michel-Elhaj is a director of Nicheliving, now trading as Australian Property Alliance. (Supplied)
In 2024, Nicheliving made a deal with the WA government to surrender its building license for 10 years after hundreds of customers were left with unfinished or defective homes.
It meant customers could access building indemnity insurance payments of up to $200,000 to finish their builds, with the state government covering the $40 million bill.
The directors of Nicheliving now run a property development company, Urban Infill Developments, and a real estate company called Australian Property Alliance.
According to a report from Creditor Watch, Australian Property Alliance also has a tax debt of $750,759.
Tribunal to hear trust account allegation
The State Administrative Tribunal will hear the trust account allegation on March 10.
If found guilty, penalties can range from a reprimand up to cancellation of their licence or a suspension for a period of time.