The term Trust Account can be confusing as, broadly speaking, there are two types and they’re often mixed up.  The two broad types of Trust Accounts are:

  • A ‘bank’ account for a Trust, e.g. an account with a bank, building society or credit union for a Family or Unit Trust, and
  • A ‘bank’ account required by legislation, to be setup in a specific manner, often called a Statutory Trust Account.  They are generally prescribed for professionals who need to collect money on behalf of a client, e.g. real estate agents, solicitors, accountants, insurance brokers, etc.  Often they are not allowed to earn interest and must have all ‘bank’ fees related to the account, charged to another account.  At a minimum they are normally audited by an approved company auditor annually.

In ‘traditional’ residential real estate transactions ‘settlement’ normally takes place relatively quickly and is usually achieved with the assistance of either a solicitor or conveyancer acting for each side.  However creative real estate transactions often delay settlement and involve a schedule of regular payments prior to ‘settlement’ and the transfer of Title.

It’s the collection of these regular payments that we need to look at, to make sure we don’t  break any rules when we’re using Lease/Options, Instalment Contracts and Deposit Finance.


As most of us know, if we own a rental property we’re allowed to self-manage that rental.  However if we want to get our rental property managed by a property manager, that property manager has to be a licensed real estate agent.  What you may not know is that all property managers have to operate with a ‘statutory trust account’.  They vary slightly from State to State but they have specific rules, including the requirement for them to be audited annually.

Are you managing a Lease/Option for a property you don’t own?  If you are we suggest you check with your solicitor to confirm you are operating within the requirements of your State’s residential tenancy and real estate agent  laws.  In NSW for example the penalty for acting as a real estate agent without a licence can be up to $11,000 for an individual and $22,000 for a company.

Instalment Contracts and Deposit Finance

The above information regarding residential leases is more well known than the trust account requirements specified in the National Consumer Credit Protection Act 2009 (NCCP).

In summary the NCCP says an Australian Credit Licence holder that ‘in the course of providing the credit service, receives money on behalf of another person’, …… ‘must maintain one or more trust accounts’.

If you are managing a loan that resulted from the sale of a property you own, via an Instalment Contract or Deposit Finance and the transaction was not ‘in the course of a business’, you are the credit provider and you are likely to be receiving the loan repayments on your own behalf.  In this case you probably don’t need to operate with a trust account.  However, be safe and check with your solicitor.

If you are managing a loan, for a property you don’t own, you are probably not the credit provider and you may be receiving money on behalf of another person.  If this is the case we suggest you check with your solicitor to confirm you are operating within the requirements of the NCCP.  Penalties for not operating within these requirements can attract a fine of 2,000 ‘penalty units’.  This equates to $220,000.

Vendor Finance Management Pty Ltd (VFM) utilises a statutory trust account to assist in the management of its client’s loans.  Visit our website for more information.


Paul Dobson