There are some things we can turn a blind eye to. Sneaking in a 3pm sweet tooth chocolate break. Taking an extra biscuit from the staff room stash. Knocking off 5 minutes early to catch some of the last rays of sunshine on a Friday afternoon. But there are some things that you simply cannot ignore. Like your responsibilities as a Licensee in charge or OIEC.
What you don’t want is a knock at the door from your regulatory body? That would just ruin the start of any weekend.
SO WHO IS RESPONSIBLE FOR WHAT?
Rules of conduct stipulate that every place of business must be in the charge of a licensee. This Licensee is responsible for all the work and business carried out at the place of business. For those who own several businesses, each requires its own Licensee in charge to supervise the business carried out at each location. No single Licensee can be in charge of two separate places of business. It’s like a couple of toddlers – what’s mine is mine, what’s yours is yours.
WHAT ARE MY MAIN RESPONSIBILITIES AS A LICENSEE?
As a Licensee you are responsible for all work that occurs at the place of business.
This includes:
Supervision of employees engaged in the business.
You are responsible for your staff and the work they do. Everything and anything they do will fall back on your shoulders – so ensuring you have your finger on the pulse of what is happening in your business is vital.
Establishment and adherence to procedures.
It is essential to establish a set of policies and procedures to ensure that the provisions of your Act & Regulations are adhered to. In NSW this Act is the Property, Stock and Business Agents Act 2002 & Property, Stock & Business Agents Regulations 2014. All employees need to demonstrate and practice ethical behaviour in all their actions. This will protect both your staff and customers in the long run as well as negating any nasty fraudulent activities and run ins with the Regulator. Apart from the legalities, it will just ensure that your business runs more effectively and productively with good systems.
Monitor the conduct of the business and ensure staff follow procedures.
It is all very well and good to set policies and procedures in place but it is the duty of the Licensee to ensure that staff diligently adhere to them. Communication is key in monitoring your staff. Ensure open communication channels whereby staff feel valued, trusted and loyal to company policies.
Manage trust accounts correctly.
Due to the large sums of money staff handle through trust accounts, it is vital that you provide close supervision and leadership to your employees. You may receive guidelines on the correct supervision of the business from your states regulator. Ensure you follow them closely.
LEARN FROM OTHERS
Most agencies receive trust accounting breaches because through random audits, they have stated that they were unaware of the legalities around simple things. Things such as the correct wording on source documents. Or in extreme cases, the fact that they were required to reconcile on a monthly basis. It is your job as Licensee to know the rules. ‘I didn’t know’ or ‘I’m in Sales not Property Management’ is not a good enough excuse. Rather, it may be grounds for the regulators to issue on the spot fines. Or as in some extreme case, freeze the agencies trust accounts.
One agency in particular felt the full force of the law when they had failed to reconcile their account for 4 years. It resulted in an unbalanced trust account of over $150,000.
When questioned as to why there was such a discrepancy in the trust account the Licensees response was ‘I’m in Sales not Property Management, that’s why I employ a Property Manager for’. Therefore the regulator saw grounds to put the agency in forced administration which lasted over 4 months.
So the agent was found guilty of failure to properly supervise, failure to reconcile their trust account on a monthly basis, failure to complete mandatory audit on time and several other breaches. As a result, this discrepancy cost the agent over $90,000 in fines and penalties. It resulted in a black mark against their name on the regulators website. Not to mentioning the loss of business it caused while the administrator was appointed and the near loss of livelihood the agent endured from the stress.
THE LESSON LEARNED?
Follow the rules, supervise and keep the regulators at bay.
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~ 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 18 years industry experience. Don’t trust just anyone with your trust accounting. Trust End of Month Angels and get back to what you do best – growing your business.