Licensees who receive money for real estate transactions are required by law to pay that money into a trust account.
Trust accounts for companies and licensee partnerships
If you are an agent working as a company, the company can operate the trust account, and any agent working for the company can pay money into it. If you are in partnership with other licensees, the partnership can operate the trust account.
Money must be held for 10 working days
All money you receive for a real estate transaction must be held in the trust account. It cannot be paid to any person for a period of 10 working days after the date it is received unless authorised in writing by all parties or by a court order.
You can use a third-party trust account
All money you receive for any transaction in your capacity as an agent must be paid into a designated trust account, but you do not have to operate that account yourself.
If you switch from using your own account to a third-party account, you must inform REA and your auditor. You must also arrange for a final audit report to be completed by your auditor.
Operating a trust account
Receipt of payments
- All money received by an agent for a real estate transaction must be paid to the person who is lawfully entitled to that money or in accordance with that person's instructions.
- The money must be held in a trust account until it has been paid out (section 122 of the Act).
- An agent must account for trust monies received.
- An agent must not pay money held in a trust account to any person for a period of 10 working days (from the date received) unless early payment is authorised by all parties to the transaction or by court order (section 123 of the Act).
Trust accounts must be audited
Trust accounts that hold money related to your work as a licensee must be audited.
Read more about auditing trust accounts here.
Relevant legislation that covers the audit regulations:
You must pay out (including any interest) to the person entitled to it
All money you have received for a real estate transaction must be paid to the person who is lawfully entitled to that money or in accordance with their instructions. It must be held in the trust account until it is paid out. You are expected to account for all trust money you have received.
Banks do not normally pay interest on trust funds. If any interest is earned on trust account funds, it must be paid to the person entitled to it.
Important questions answered
What do I need to know about receipt of money?
All money received by an agent for a real estate transaction must be paid to the person who is lawfully entitled to that money, or in accordance with that person's instructions.
The money must be held in a trust account until it has been paid out (section 122 of the Act(external link)).
An agent must account for trust monies received.
An agent must not pay money held in a trust account to any person for a period of 10 working days (from the date received), unless early payment is authorised by all parties to the transaction or by court order (section 123 of the Act(external link)).
Who can be appointed as an auditor?
A person may be appointed as an auditor if that person:
- is a chartered accountant
- holds a certificate of public practice from Chartered Accountants Australia & New Zealand
- is not disqualified on the basis of specified conflicts of interest.
Do I have to let REA know who my auditor is?
If you have been granted an agent’s licence for the first time, you must let us know who you have appointed as your auditor before receiving any money into the trust account. This must include confirmation from the auditor that they are eligible to be an auditor.
Refer to Audit Regulation 12 here.(external link)
Download the Change of auditor notification form [PDF, 65 KB].
Do I have to let REA know if I change my auditor?
If you engage a new auditor, you must notify us before the previous auditor ceases to be engaged or within 20 working days of a change occurring.
Can I use a third-party trust account?
It is up to individual agencies to decide how they wish to structure their business and to ensure that they comply with the Act and the Audit Regulations.
Sections 122-125 of the Act set out agents' duties in relation to the receipt of money and the audit of trust accounts.
All money received by an agent for any transaction in their capacity as an agent must be paid into a designated trust account. The Act and the Audit Regulations do not specify that an agent must actually operate a trust account, only that money received must be paid into a trust account.
If an agent chooses to use a third-party trust account, they must notify their auditor and REA that they are doing so and that their own trust account is inactive or closed.
The referenced sections of the Act can be found here(external link).
When are reconciliation statements due?
Reconciliations must be done and given to your auditor every month, even if there were no transactions during the month concerned.
Reconciliations are due with the auditor on the 20th of each month except for January when the report is due by the 27th.
How many trust account examinations are there each year?
Auditors are required to examine the trust account three times each year as outlined in the following schedule:
2 months to 31 May
1 July — 31 August
5 months to 31 October
1 December — last day of February
5 months to 31 March
1 April — 30 June
The auditor must give REA a signed copy of the audit report within 10 working days of completing the final audit for the year.
Failure to supply your auditor with the necessary documents to enable them to comply with the audit schedule may lead to disciplinary action.
Do I need to provide a statutory declaration with each statement I give my auditor?
You need to provide an official statutory declaration with each statement you give to your auditor (Audit Regulation 16(external link)).
This declaration must be signed by either a Justice of the Peace, barrister and solicitor, a notary public or other official as listed in section 9 of the Oaths and Declarations Act 1957(external link).
This statement and declaration must be provided to the auditor three times a year at their request before the start of the audit. The Real Estate Authority does not provide a template for this declaration but recommends you use the wording in Audit Regulation 16(2)(external link)(external link).
You do not need to provide a statutory declaration with your monthly bank reconciliations.
Do I need to provide written confirmation from the bank?
You are required to provide the auditor with written confirmation from your bank confirming that the account is a designated trust account.
What about inactive trust accounts?
A trust account can be made inactive if the agent changes jobs, starts a company of their own or enters into a partnership with another agent as stated in Audit Regulation 24(external link).
If the trust account is inactive the agent must give notice to the auditor in writing that the account is inactive and that all money in it has been paid to the appropriate people. The agent must provide the auditor with all unaudited trust account records and receipts.
The auditor must keep these records while the account remains inactive. If the agent wishes to reactivate the trust account they must notify the auditor who must, in turn, advise REA as stated in Audit Regulation 26(external link).
What about closed trust accounts?
An agent is expected to close a trust account when they stop conducting business as an agent.
When a trust account is closed, the agent is obliged to ensure a final audit is carried out on the trust account within 20 working days.
Residential property management is not covered by the Real Estate Agents Act
The information on this page relates only to real estate transactions. Agents or agencies should maintain separate trust accounts for property management transactions and these should be audited according to the relevant professional standards.
If any irregularities in property management accounts or transactions are found, the auditor has to report them to REA.