A real estate agency's trust account shows a shortage of $5,000 during a routine audit. What is the most serious disciplinary order available under the Real Estate Agents Act 2008?
Correct Answer
C) Cancellation of the licence by the Disciplinary Tribunal
If a charge of misconduct is proved, the Real Estate Agents Disciplinary Tribunal can cancel the licensee's licence under section 110 of the Real Estate Agents Act 2008, and for a company also cancel the licences of its officers. The Authority and its complaints assessment committees cannot cancel licences; cancellation is the most serious order the Tribunal can make.
Why This Is the Correct Answer
If a charge of misconduct is proved, the Real Estate Agents Disciplinary Tribunal can cancel the licensee's licence (s 110), and for a company also cancel the licences of its officers. That is the most serious order available; complaints assessment committees cannot cancel licences.
Why the Other Options Are Wrong
Option A: A censure or reprimand from a complaints assessment committee
Censure is among the lightest orders a complaints assessment committee can make (s 93); it is not the most serious outcome.
Option B: Suspension of the agency's licence for a maximum of 12 months
The Tribunal can suspend a licence for up to 24 months, not 12, and cancellation is more serious than any suspension.
Option D: A fine of up to $10,000 imposed by a committee
A committee can fine up to $10,000 for an individual or $20,000 for a company (s 93), but a fine is less serious than cancellation.
Deep Analysis of This Compliance Question
The disciplinary system has two tiers. A complaints assessment committee deals with unsatisfactory conduct and can censure, order training, fine (up to $10,000 for an individual or $20,000 for a company) and order compensation. Misconduct is charged before the Disciplinary Tribunal, which can also suspend a licence for up to 24 months, cancel it, fine up to $15,000 or $30,000, and order compensation up to $100,000. A trust account shortfall can reach the top tier if dishonesty or serious neglect is involved.
Background Knowledge for Compliance
Section 93 of the Real Estate Agents Act 2008 lists the orders a complaints assessment committee can make; section 110 lists the orders the Disciplinary Tribunal can make if misconduct is proved, including cancellation and suspension for up to 24 months. Section 115 lets the Tribunal suspend a licence pending the outcome of a hearing where that is in the public interest.
Memory Technique
Complaints assessment committees censure, train and fine; only the Disciplinary Tribunal can suspend (up to 24 months) or cancel a licence.
When a question asks for the most serious outcome, look to the Tribunal's powers in section 110, not the committee's in section 93.
Exam Tip for Compliance
Cancellation is a Tribunal order under section 110; the Authority and its committees cannot cancel a licence.
Real World Application in Compliance
An auditor reports a $5,000 trust shortfall caused by an office manager's personal withdrawals that the agency failed to detect. A complaints assessment committee investigates and charges the agency with misconduct before the Tribunal, which can impose anything up to cancellation depending on the seriousness and the agency's response.
Common Mistakes to Avoid on Compliance Questions
- •Thinking fines are sufficient for trust account violations
- •Assuming good faith or immediate reimbursement prevents licence cancellation
- •Confusing trust account breaches with general compliance issues
Related Topics & Key Terms
Key Terms:
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A real estate agency's trust account reconciliation reveals a shortage of $5,000 that cannot be immediately explained. What should the agency do?
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