By Rod Stowe - NSW Fair Trading
A Victorian rent roll scam has jumped the border into NSW.
I am sure it seems to agents that we are always wagging our Fair Trading finger in their direction. We’re either warning them to abide by their licensing requirements, reminding them to behave in an honest and ethical manner, or heralding a crackdown on compliance. Usually our messages are well-heeded, with most agents doing the right thing by their clients.
This month I’m warning again, but this time it is the agents themselves who are in danger of falling victim to unethical practices.
In recent months a Melbourne-based company, Connection Blue Pty Ltd, and its proprietor, Mark William Whittingham, have been sending unsolicited emails to real estate agents in Victoria, advertising rent rolls for sale.
Now it appears Mr Whittingham has expanded his operations across the border to New South Wales.
NSW Fair Trading and our southern counterpart, Consumer Affairs Victoria, have received complaints from several agents in both states who say they paid Mr Whittingham for rent rolls they never received. Nor were they able to secure a refund.
In one case, a Victorian agent lost $135,000 after paying a deposit for a rent roll Connection Blue failed to deliver. Another Victorian agent claims to have paid $24,200 and one New South Wales agent appears to have lost $1000.
In September last year, Victoria issued a public warning over the conduct of Mr Whittingham and his former company, Buy A Trail Pty Ltd, which involved offers of loan trail books for sale to brokers.
Last month a second warning was issued over the rent roll scam that is now affecting NSW agents.
Rent rolls are an integral part of most real estate businesses and they are an effective way of ensuring regular and consistent cashflow. I probably don’t need to remind agents of the importance of conducting due diligence. We advise that you consider the following before making a rent roll purchase:
- Check the accounts have been independently audited to ensure the roll’s revenue has not been inflated.
- Have your lawyer examine the contract closely to ensure there are no unreasonable conditions.
- Ensure that any money you are required to pay for buying a rent roll is held on your behalf in a solicitor's trust account, rather than any accounts controlled by the person promoting the sale of the rent roll.
- All clients on the roll should have signed agency agreements and check that the bonds have been lodged for all properties.
- Check that the existing inspection reports for properties are recent, and watch out for tenants in heavy arrears.
- Review the complaints register to ensure past complaints have been appropriately handled and there are no unresolved live issues.
- Above all else, in light of the recent scam, always check with the owner that they have agreed to sell their rent roll and have appointed the broker you are dealing with. The broker must hold a current business agent’s licence.
And if Mr Whittingham comes calling, make sure you give us a call on 13 32 20 or visit our website at www.fairtrading.nsw.gov.au
This article was first published in the June 2013 edition of the REINSW Real Estate Journal.