How The New NSW Reforms Affect Rent Roll Ownership & Sales 

As we all know, the NSW Licensing Reforms come into effect on the 23rd March 2020. With it come new requirements for vendors and owners of rent rolls to remain compliant. We provide a breakdown of the main points for rent roll owners and potential vendors to consider and how the NSW Reforms Affect Rent Roll Ownership.

Main Considerations for Rent Roll Sales Post Licensing Reforms

1. If you still own the rent roll as at midnight on the 22^nd March and you have a combined sales/rent trust, you will need to separate any sale deposit money from your rental trust. This means opening a separate account and transferring any sales funds across to the new trust account. We recommend having this done via an external consultant. Any mistakes you make during the separation process could potentially bite you in your next audit. They can possibly complicate the final disbursements between the Buyer and Seller upon settlement.
2. If you hold any trust money in a separate sales trust account between 23^rd March and 30^th June there will be additional fees for your audit. You can potentially use the Vendors solicitor’s trust, however, it’s not recommended. Control is lost and costs vary between auditors. Do your research. We recommend that the Auditor has a well-documented history with Real Estate trust accounts and is not your regular company accountant.
3. Depending on your software program you may need to subscribe to another Trust Accounting software subscription for your new sales trust account. This will add to your operating expenses.
4. If you use a 3^rd party trust account provider that approves the payments, their access will need to be updated by 23^rd March. The 3^rd party provider can continue their service as normal, but will not be able to approve final payments.
5. Remove other Directors/Partners from authorising trust accounts including cheque signatories. Otherwise, you can expect a breach on your next audit.
6. Update policy and procedure manuals. We recommend you outsource to an external provider. You don’t want to miss anything that could mean a Breach under Section 32 – Failure to Supervise.
7. Silent partners cannot transact on the trust account. Penalties apply for unauthorised persons transacting on the account.
8. You must have an appointed Licensee for the Corporation (if not done already) before 1^st March 2020 to allow enough time for Fair Trading to process.
9. You must keep trust records for a period of 3 years post-sale. This is more pertinent particularly after the reforms are in place.
10. Ensure you’re available to authorise trust transactions post 23^rd March. You won’t be able to delegate this to anyone else. If you’re selling your rent roll and settlement is scheduled after the 23^rd March, you will need to make yourself available right up until the day of settlement.

Jane Morgan is the Licensee in Charge of Rent Roll Angels & Director at End of Month Angels. Jane isn’t just your average broker. She is an industry veteran with over 23 years in the industry, 15 years as a Property Manager and an active Real Estate trainer. She knows the pitfalls & successes of rent roll acquisitions like the back of her hand. Contact Jane today to discuss your rent roll requirements.