A vendor asks the agency to release the buyer's deposit to her two days after it was paid in, because she needs it for her next purchase. The buyer has not agreed. Under s 123 of the Real Estate Agents Act 2008, what must the agency do?
Correct Answer
A) Hold it for 10 working days unless all parties sign an authority or a court orders.
Section 123(1) of the Real Estate Agents Act 2008 says an agent must not pay money received in a transaction to any person for 10 working days after receiving it. Section 123(2) allows earlier payment only under a court order or an authority signed by all the parties to the transaction. The vendor's request alone is not enough.
Why This Is the Correct Answer
Only a court order or an all-party signed authority overrides the 10-working-day hold.
Why the Other Options Are Wrong
Option B: Release it, because deposit money belongs to the vendor as soon as it is paid.
Section 123(1) bars paying the money to anyone for 10 working days after it is received.
Option C: Release it if the vendor alone signs a written authority to do so.
Early release needs an authority signed by all the parties to the transaction, or a court order.
Option D: Hold it until settlement, since agents can never release deposits before then.
After 10 working days the agent may pay the person entitled, subject to any title requisitions under s 123(3).
Background Knowledge for Compliance
Source: https://www.legislation.govt.nz/act/public/2008/0066/latest/whole.html
Exam Tip for Compliance
Section 123: hold 10 working days; early release needs everyone's signature or a court order.
Common Mistakes to Avoid on Compliance Questions
- •Releasing a deposit early on the vendor's instruction alone.
More Compliance Questions
A real estate advertisement states 'Best value in the area' without any supporting evidence. Under the Fair Trading Act, this statement is:
Under the Fair Trading Act 1986, which statement about advertising a property for sale is correct?
A client provides a bank cheque for $30,000 as a deposit and mentions recently selling cryptocurrency to fund the purchase. Under AML/CFT requirements, what is the appropriate next step?
An agent holds $180,000 in trust across four transactions. One agreement is validly cancelled because the purchaser's finance condition was not met, and both parties' lawyers confirm the $60,000 deposit is to be refunded to the purchaser. What is the correct trust account procedure?
Under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, what is the minimum threshold for conducting customer due diligence when establishing a business relationship in real estate transactions?
- → An international client buying a $2.8 million commercial property provides a copy of their overseas passport but refuses any further identity checks or information, claiming diplomatic immunity. How should the agent proceed under AML/CFT requirements?
- → Which statement best describes the trust account requirements under the Real Estate Agents Act 2008?
- → An agency's trust account reconciliation reveals that interest earned on client deposits has been retained by the agency rather than distributed to clients. This practice is:
- → According to trust account regulations, how long must real estate agencies retain records of trust account transactions?
- → What is the primary purpose of the Consumer Guarantees Act 1993 in relation to real estate services?
- → Under the Consumer Guarantees Act 1993, if a real estate agent fails to exercise reasonable care and skill when marketing a property, what remedy might be available to the client?
- → 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?
- → A real estate agent advertises a property as having a 'new roof' when they know it was repaired but not replaced. A buyer purchases based on this information and later discovers the truth. Which Acts could potentially apply to this situation?
- → Which statement best describes the primary purpose of trust accounts in real estate transactions?
- → A property advertisement states 'Guaranteed rental return of 8% per annum', although no one has contracted to pay that return. Under the Fair Trading Act 1986, this statement is:
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