A real estate agency accepted funds for hundreds of property transactions into a trust account that went unaudited for six years and ignored repeated reminders that it was not complying with the law.
One Up Realty was required to appoint an auditor when it opened in 2017 but failed to do so for six years and five days, despite repeated requests from the Real Estate Authority reminding it of its trust account obligations.
According to a Real Estate Agents Disciplinary Tribunal’s decision, the Auckland-based agency received funds from 275 transactions in that time.
The authority told NZME it did not take action sooner because the agency was new and its approach was to work with new agencies to achieve compliance before escalating to enforcement action.
During that time, the authority said it received no complaints about One Up Realty and identified no other compliance concerns.
The authority said the agency had made numerous genuine attempts to appoint an auditor without success.
According to the authority’s decision, when an auditor conducted a retrospective audit, no irregularities were found in the handling of trust funds.
Last month, the agency was fined $18,000 after admitting a charge of reckless contravention of the Real Estate Agents Act 2008.
The authority’s chief executive, Belinda Moffat, said the case highlighted the critical importance of compliance with trust account audit regulations by real estate companies.
“Real estate agencies handle significant client and customer funds in relation to property transactions. Trust account obligations exist for the protection of consumers and their funds,” Moffat said.
“If trust accounts are not managed correctly, this could result in financial loss to consumers, reputational damage to the agency, and loss of trust and confidence in the industry as a whole.”
The tribunal’s decision served as a reminder that failure to comply with audit regulations relating to trust accounts was a serious breach that could have significant consequences, including consumer harm, she said.
“Agencies’ systems and practices must be fully compliant and company officers are responsible and accountable for ensuring that they remain so.”
One Up Realty was contacted for comment.