Common Trust Account Breaches to Avoid in 2025
Between January and June 2025, NSW Fair Trading issued 79 fines totalling $114,970 to real estate agencies for Trust Account breaches. That’s nearly $115,000 in penalties in just six months.
The question isn’t if your industry regulator will breach your Trust Account—it’s when. And based on what we’re seeing across our client base, here are the three most common mistakes that are getting agencies breached right now.
What We’re Seeing Agencies Breached For
Not reconciling daily, or weekly, we get it small agencies with less then 20 tenancies, reconciling daily is a lot, this is why we would recommend weekly. When doing it regularly you’re going to pick up the errors faster.
When you back date transactions, this shows you are not doing this regularly, and if its for a previous period, and you haven’t closed the period in the prescribed timeframe you can also receive a breach. Auditors will pick this up immediately.
Not Using the Right Software; Using software that isn’t designed for real estate Trust Accounting or trying to manage trust funds through basic accounting platforms is a recipe for disaster. Your Trust Accounting software must comply with your state’s legislation and provide proper audit trails. You can go off what your accountant says, Xero is not allowed for trust Accounting. Please reach out to your industry body, ACOP, us at EOMA, or even the Real Estate Institute all of these people are here and knowlegable in our industry.
Carrying Over Adjustments; Rolling adjustments from one period to the next without properly resolving them is a major red flag. Adjustments should be investigated and corrected in the period they occur, or within 1 month. Carrying them forward month after month shows poor financial management and will absolutely be flagged during an audit. Do not open a closed period.
Opening a closed period; Everything can be fixed in the current period, do not open a period, all your month end reports will be wrong, and if you open the period the auditor will be able to see this.
Trust Account Golden Rules to Avoid Being Breached
Software First, Bank Second
Always enter the transaction in your software before processing it at the bank. This ensures you have sufficient funds and maintains your audit trail integrity.
Can’t Pay What You Don’t Have
You cannot disburse funds from the Trust Account unless you’re holding funds on behalf of that landlord/vendor. It sounds simple, but this rule gets broken more often than you’d think.
Also do not receipt live transaction, always receipt the day after, ie receipt Fridays transactions on Monday As best practice you want to have you end of day balance match your trust account software to the cent.
Check Twice, Disburse Once
Always verify your disbursements before releasing funds. Uploading the incorrect bank file can easily overdraw your Trust Account and trigger an immediate breach.
The Bottom Line
With penalties reaching up to $22,000 for corporations and $11,000.00 for individuals per breach, Fair Trading increasing their spot checks, getting your Trust Account management right isn’t optional—it’s essential. If you’ve made any of these errors or need help implementing proper systems before your next audit, our friendly team of Angels is here to help. Talk to us about our support packages today.
