A vendor and purchaser agree that the 10% deposit on a long settlement should earn interest for them. How can the agent hold it so the interest is not paid to the Statutory Interest Account?
Correct Answer
C) In a separate trust account for the exclusive benefit of the vendor and purchaser
Section 86(6) of the Property and Stock Agents Act 2002 recognises a separate trust account opened by a licensee for the exclusive benefit of both the vendor and purchaser of land, and s 35 of the Property and Stock Agents Regulation 2022 exempts such accounts from s 90, the interest-to-Statutory-Interest-Account rule. The money stays trust money but the interest can follow the parties' agreement.
Why This Is the Correct Answer
The Act and Regulation exempt a separate trust account for both vendor and purchaser from the Statutory Interest Account rule.
Why the Other Options Are Wrong
Background Knowledge for Finance Taxation
Exam Tip for Finance Taxation
Common Mistakes to Avoid on Finance Taxation Questions
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- → An agency records every sales deposit it holds in a single ledger headed 'Sales deposits'. What does the Regulation require instead?
- → A property manager receipts $1,800 cash rent on Tuesday and locks it in the office safe for the agency's usual Friday banking run. Is this compliant, assuming Wednesday banking was practicable?
- → A supplier obtains a court judgment against a NSW agency for unpaid office fit-out costs and tries to enforce it against the agency's trust account. What is the position?
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A supplier obtains a court judgment against a NSW agency for unpaid office fit-out costs and tries to enforce it against the agency's trust account. What is the position?
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An agency closes one of its trust accounts after merging its sales operations. What must the licensee do about the closure?