Section 54 trust accounts for estate agencies
What section 54 of the Property Practitioners Act requires of an agency's trust account, and how to keep trust money out of the agency's own books.
By Achekam · · 5 min read · For Real estate businesses in South Africa
A buyer's deposit lands in the agency's bank account on a Tuesday afternoon. The transfer is months away. The agency is short of cash this month, the deposit is sitting right there, and the money will be back long before registration. That line of thinking is exactly what the law is written to stop.
Section 54 of the Property Practitioners Act, 2019 exists to make sure money held for buyers, sellers, landlords and tenants never becomes the agency's working capital. This article walks through what the section requires, step by step, and how the agency's own books should be kept so that trust money stays out of them.
A separate account, with the right name, at the right bank
Section 54(1)(a) requires every property practitioner to open and keep one or more separate trust accounts with a bank registered under the Banks Act, 1990, and each account must contain a reference to section 54.
That reference is not decoration. It tells the bank, the auditor and anyone else who sees the account that the money in it belongs to other people. An agency that runs deposits through an account without that reference, even briefly, has a problem the next audit will find.
Deposit trust money immediately
Section 54(1)(d) requires the practitioner, or its responsible or designated employee, to deposit all trust money held or received by or on behalf of the practitioner into the trust account immediately.
"Immediately" leaves little room for interpretation. A cheque collected at a show day, a deposit handed over at signature, or a tenant's first payment that arrives in the business account by mistake should all be in the trust account as soon as practically possible. Write down who in the agency is the designated employee for this, and who covers when they are away.
Investing money that is not needed yet
Deposits on sales often sit for weeks or months. Section 54(2) allows trust money that is not immediately required for any particular purpose to be invested in a separate savings or other interest-bearing account with any bank, provided the account refers to section 54(2) and its details are given to the Authority as prescribed.
So an investment account is a second, distinct trust account, with its own reference and its own reporting to the Property Practitioners Regulatory Authority. It is still trust money; investing it does not change who it belongs to.
Holding it until you are entitled or instructed
Section 54(3) says a property practitioner must keep trust money in the trust or investment account until it is lawfully entitled to the money, or is lawfully instructed in writing to pay it to any person.
Two practical consequences follow:
- Commission is not earned because a deposit arrived. The agency becomes entitled to its commission under the terms of its mandate and the sale agreement, typically on registration of transfer. Until then, the deposit is not commission.
- Paying out on a phone call is not enough. A payment to a seller, a buyer or anyone else needs a lawful instruction in writing. Keep it on the file.
Section 54(12) adds the backstop: the balance in a trust or investment account never forms part of the practitioner's own assets, or of the estate of a practitioner who has died or become insolvent.
The full text is on Acts Online's page for section 54 of the Property Practitioners Act, which sets out the duty to keep separate trust accounts, when the money may be invested and when it may be paid out.
Separate records, balanced every month, audited every year
Section 54(5) requires a property practitioner to keep separate accounting records of trust and invested money, to balance those books at intervals of not more than one month, and to have them and its business accounts audited by the same auditor within six months after its financial year-end. Section 54(6) requires the audit report to go to the Authority as soon as it is received; a later submission is allowed only on payment of a prescribed penalty.
In plain terms, the agency keeps two sets of records:
| Records | What they show | Who they belong to |
|---|---|---|
| Trust records | Each deposit held, for whom, and each payment out | Buyers, sellers, landlords, tenants |
| Business books | The agency's income, costs, assets and liabilities | The agency |
The trust records must balance, every month, to the trust bank statements, and the total held for all clients must equal the money in the trust and investment accounts.
The agency's own books, with trust money kept out
Achekam keeps the agency's business books. Each business has its own double-entry ledger with a standard chart of accounts, and accounts can be added, renamed or switched off. That ledger is for the agency's own money. Deposits held in trust do not belong in it as income, and the trust bank account should not be treated as one of the agency's own bank accounts. The separate trust records the Act requires are a distinct set of books, kept as the agency and its auditor agree.
What the agency's own ledger does need is the moment when trust money stops being trust money. A worked example in words:
- The buyer's deposit sits in the trust account. Nothing appears in the agency's own books.
- Transfer registers, and the agency raises its commission invoice to the seller, which posts as a debtor and commission income.
- Under a written instruction, or once lawfully entitled, the commission is transferred from the trust account to the agency's business account.
- In the business books, that transfer is recorded as the receipt against the commission invoice.
On the business side, statements for the agency's own bank account can be imported as PDF, CSV, Excel, OFX, QIF, MT940 or CAMT.053, and each import is checked so that the opening balance plus movements equals the closing balance. Bank lines are matched by suggestion, a person accepts each match, a line not yet in the books becomes a suggested journal a person approves, and a reconciliation completes only when no difference remains or every leftover line is explained. A commission receipt that cannot be matched to an invoice is a prompt to ask where it came from.
Where commission is paid by the conveyancer rather than from the agency's own trust account, the flow differs; see commission paid by the conveyancer. For setting up the income accounts, see an estate agency chart of accounts.
Take last month's trust bank statement and the trust records side by side, check that they agree to the cent, and make sure no deposit appears anywhere in the agency's own income accounts.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
