There is a joy in doing business in Australia while there are protections in place for consumers. In all States and Territory jurisdictions, the regulations have created a Property Services Compensation Fund to guarantee monies held in trust.
Where an Agency or an employee of an Agency steals money from the trust, the consumer can make a claim on the Property Services Compensation Fund for reimbursement. Essentially, the fund is a guarantee to all consumers that their money is safe.
The Property Services Compensation Fund is created from the interest payments from Property Services trust accounts. In short, the banks will pay the interest on those accounts to the Office of Fair Trading. The only exception is controlled monies, which are accounts specifically set up for individuals where the interest is paid to those individuals.
There have been a number of Strata Managers in past years who have found the lure of the Trust Account to be far too attractive. The Office of Fair Trading has repaid all Owners Corporations for the misconduct of Strata Managers. What a wonderful scheme!
However, interestingly enough, the Strata industry doesn’t contribute to the Property Service Compensation Fund. Owners Corporations create separate administration and capital works funds that earn interest for the Owners Corporation.
Real Estate Agents and Stock and Station Agents therefore are subsidising the Strata Management industry. Is it time that Owners Corporations are exempt from making claims under the Compensation Funds?