September 2024

Warning when using third party payment platforms for real estate transactions

The Department of Energy, Mines, Industry Regulation, and Safety (Consumer Protection) is warning real estate agents, landlords and tenants about the risks of using third party payment platforms for real estate transactions. including rent, instead of the agents’ nominated trust accounts.

What does this mean?

There are a number of third party payment platforms that operate nationally, providing property management and tenancy software services to the real estate industry, including in Western Australia.

The software is an automated payment system and can involve another separate entity and overseas banks.  When third party platforms are used for real estate transactions, the money is paid into overseas banks and not into the agent’s nominated trust account. 

Under the Real Estate and Business Agents Act 1978 (WA) (REBA Act) agents must deposit funds received from real estate transactions into a nominated trust account. Third party platforms are not licensed real estate agents and are not required to use trust accounts.

What are the risks?

Commissioner for Consumer Protection Trish Blake warns tenants, agents and landlords that they are not covered by the fidelity guarantee protections under the REBA Act if they pay money to a third party platform. Not only does the REBA Act not apply but the platform providers are generally overseas and if something goes wrong the money is lost.

“I understand that there may be particular financial benefits provided by these third party payment platforms for agents however the cancellation of the fidelity protections under the REBA Act is a serious loss of protections when something goes wrong.” Ms Blake said. 

Your obligations when using third party payment platforms

Based on this warning, any agent who has engaged the services of a third party payment platform is encouraged to exercise due skill, care and diligence and inform everyone affected of the loss of their statutory protections.   

“I expect all agents to provide the appropriate disclosure to their clients that if they use a third party payment platform to collect and distribute monies relating to rent and other real estate transactions, that their client would not be covered by a fidelity guarantee account if anyone were to misappropriate the funds” Ms Blake said.

Enquiries can be made by calling 1300 30 40 54 or by email