Are you looking to open an agent trust account? Unfortunately, I have seen a number of trust accounts set up incorrectly which can be time consuming and difficult to change once the trust account is in operation. Below are things to consider when setting up a trust account (please note that the legislation quoted relates to Queensland, Australia but has relevance in other Australian States).
Who needs a trust account?
You need a trust account if you intend to collect amounts on behalf of others and you have a licence to be:
a real estate agent
a resident letting agent
an auctioneer
a chattel auctioneer
a motor dealer (if you sell used vehicles on consignment)
a field agent (if you collect debts on behalf of someone else).
Note: A collection agent is a type of debt collector that does not need a licence. If you are a principal collection agent and you receive money for someone, you will need to follow a specific process to open and operate a trust account. If you are a collection agent please refer to the Office of Fair Trading (OFT) website for further detail.
What is a special trust account?
In certain circumstances, and with the agreement of all parties, agents may invest trust money in a special trust account.
You may only use a special trust account if you:
are transacting the sale of real property
will be holding money in trust for more than 60 days
have a written request from all parties that you invest the money.
In all other circumstances, you must use a general trust account.
Who can open and operate a trust account?
Only a principal agent may open a general trust account. If you’re trading under a company structure this will be the relevant officer of the licensed corporation, otherwise, it will be the individual licensee.
Where can I open a trust account?
Agents must open a trust account with a Queensland branch of an approved financial institution. That is, a bank, building society, credit union or other deposit-taking institution the OFT approved to hold agents’ trust money.
The OFT has approved the following institutions:
Australia and New Zealand Banking Group
Bank of Queensland Limited
Bank of Western Australia Ltd
Bendigo Bank Limited
Capricornia Credit Union
Commonwealth Bank of Australia
Heritage Building Society
HSBC Bank Australia Limited
Macquarie Bank Limited
National Australia Bank Limited
Queensland Country Credit Union
St . George Bank Limited
Suncorp Bank
Westpac Banking Corporation
When you open a trust account you must also remember to supply the approved financial institution with written advice that it is a ‘trust account’ and show them a copy of your or your company’s licence as applicable.
Just remember that banks do not open trust accounts every day and can make mistakes when setting up the account. Recently I have seen an agent who presented their real estate licence, however the trust account was set up as a Solicitors Trust Account. Another clients account was set up as a trustee account, (i.e.in the name of the trustee as trustee for the trust) as opposed to a statutory trust account. It is the Agents responsibility to ensure that the trust account has been set up correctly.
Are there any requirements for naming the trust account?
The trust account must be opened in line with the licence presented.
If you intend to trade under a company structure, your company must have a corporate licence and the trust account must be in the company’s name. Similarly, where a licence is issued to an individual, the trust account must be opened in the individual’s name. It cannot be opened in the name of a corporation or other entity.
In both cases, the words ‘trust account’ or ‘special trust account’ must appear in the name of the trust account.
It is recommended that agents include the name under which they are licensed to carry on a business.
Don’t forget to notify the OFT!
You must notify OFT that you have opened a trust account by completing Form 5 and submitting it within two months of opening the account.
It is also important to remember to appoint an auditor within one month of opening a trust account and to notify the OFT of the appointment within one month of appointing an auditor.