Deciphering the legislation changes
As of 23rd March 2020, we saw changes to the legislation which meant that Certificate of Registration Holders transitioned to Assistant Agents.
The new legislation brought about some changes to the daily functions of a person working in a trust accounting role. They can no longer perform all of the same duties as prior to 23rd March.
The main changes are based around the approval of trust account payments. With it, we saw the implementation of a time restriction on the life of the qualification of 4 years.
Where does the confusion lie?
The confusion for individuals working in a Trust Accounting role is,
- Do they need to upgrade to a Class 2 license? or
- Is their role purely considered admin and therefore requiring no qualification?
Firstly, let’s look at what has changed for this qualification level.
Assistant Agents cannot:
- Display the words ‘Real Estate Agent’ on your business card
- Approve trust account payments
- Sign agency agreements or contract for sale of land
- Continue working in the industry after 4 years without upgrading to Class 2 License
- Sign a franchise agreement
Assistant Agents can:
- Receipt rent and process End of Month in the trust accounting software
- Show properties for lease and for sale
- Sign leases
- Inspect properties and complete condition reports
- Arrange repairs and maintenance
NSW Fair Trading Website states:
A person who holds a certificate as an Assistant Agent must obtain the Class 2 licence. After 4 years, the Assistant Agent certificate will lapse.
Unless a person is undertaking real estate functions as outlined in the legislation, there is no requirement for them to hold a licence or certificate of registration.
More information to assist businesses to distinguish between licensed activities and administrative work can be found on our website.
Where is the crossover?
So exactly when do Trust Accounting functions cross over from just purely admin duties to functions listed in the legislation?
Let’s look at some examples:
- Receipting rent > allocating funds received to GST and other tenant charges
- Entering invoices > approving invoices for payment
- Maintaining existing trust records > setting up new chart of account codes for allocation of GST & invoices
- Sending owner statements from software > discussing statements with owners
- Send tenant ledger > discussing ledgers with tenants
- Receipt sale deposits > record sale funds incorrectly deposited to rental trust
- Setup landlord record in database > acting on written instructions to withhold funds & maintaining copies for compliance
Just as Fair Trading don’t provide an exact list of all functions required under the Act & Regulations, this list is just an example of where admin duties can easily cross over to functions where you will need to upgrade to Class 2 License in 4 years.
Working on a Trust Account requires individuals to act with:
- Skill, care & diligence
- In accordance with instructions
For these reasons, it is best practice professionally for individuals and in the clients best interest that all Assistant Agents follow the pathways available to obtain their Class 2 license within 4 years.
Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 23 years’ industry experience. Don’t trust just anyone with your trust accounting. Book an appointment with an End of Month Angel today.