Property managers must keep rent separate

The warning comes in the wake of a High Court case involving a real estate agent who short-changed landlords he was managing properties for.

Last week the High Court upheld the Real Estate Agents Authority’s appeal against a Real Estate Agents Disciplinary Tribunal ruling on the behaviour of Auckland agent Alan Morton-Jones.

The Tribunal found Morton-Jones guilty of four charges of misconduct under the Real Estate Agents Act last year.

The misconduct involved Morton-Jones not providing three landlords with the rent paid by their tenants to his property management company.

For this, the Tribunal suspended Morton-Jones’ licence for 9 months, fined him $2,000 and ordered that he complete various training in an October 2015 penalty decision.

However, the REAA appealed this penalty to the High Court on the grounds that Morton-Jones failed to correctly identify and apply important principles.

It argued that dishonesty should result in licence cancellation in all but rare cases.

The High Court agreed and Morton-Jones’ real estate licence has been cancelled.

REAA chief executive Kevin Lampen-Smith said it is rare that a licence is cancelled for non-real estate agency work.

“It was cancelled in this case because while Mr Morton-Jones was not carrying out real estate agency work, he was a licensed agent and the case involved serious dishonesty in relation to the handling of clients’ money.”

In response to the case, a property management industry veteran has warned that landlords should ensure their property managers have a distinct account for rental payments collected.

Quinovic Property Management’s Bernard Parker said that a property manager’s handling of rents for a property owner is a simple matter.

“The money doesn’t belong to the property manager, so it should be kept separate from the manager’s own business account.

“A property manager should never mingle a client’s money with their own!”

Instead property managers should have a trust account for rental payments which should be separately accounted for, Parker said.

“This account should also be independently inspected and audited regularly.

“If there is any discrepancy the property manager should be held to account immediately, thereby preventing errors from escalating out of control.”