Trust money in the wrong account or left unclaimed
What a South African estate agency should do when trust money lands in its business account by mistake, or sits in trust with no traceable owner.
By Achekam · · 5 min read · For Real estate businesses in South Africa
Two problems turn up in almost every South African agency's trust affairs sooner or later. The first is a buyer or tenant who pays a deposit into the agency's business account instead of the trust account, usually because they copied the wrong details from an old e-mail. The second is quieter: a small balance in the trust account that nobody can link to a person, left over from a sale or a lease years ago.
Both feel like housekeeping. Both are governed by specific rules in section 54 of the Property Practitioners Act, 2019, and both are the kind of thing an auditor will ask about. This article explains what the Act says and how to handle each case cleanly, including in the agency's own books.
Money keeps its character wherever it lands
Section 54(13) of the Act says trust money paid into any account other than the trust or investment account, whether in error or not, does not become part of that other account and does not lose its character as trust money.
In plain terms: a tenant's deposit that arrives in the agency's business account is still the tenant's money, held in trust. It is not income, it is not available for the agency's expenses, and it does not become the agency's simply because the payer made the mistake. Treat it exactly as if it had arrived in the right account.
Moving it across without delay
Section 54(1)(d) requires the practitioner, or its responsible or designated employee, to deposit all trust money held or received into the trust account immediately. Section 54(3) then requires it to stay in the trust or investment account until the agency is lawfully entitled to it or lawfully instructed in writing to pay it to someone.
So when a deposit lands in the wrong place, the steps are:
- Identify it. Confirm from the bank reference and the payer's details whose money it is and what it is for.
- Transfer it to the trust account as soon as practically possible, in the same amount, with a reference that ties the two transactions together.
- Record it in the trust records as received for that client, from the date it was moved in.
- Tell the payer which account to use next time, and correct the source of the wrong details if it was the agency's own old letterhead or e-mail signature.
- Keep a note on file of the error and the correction, for the auditor.
If the agency cannot identify the payer quickly, it still does not treat the money as its own. It moves the money into trust and keeps investigating.
Explaining the line in the business bank reconciliation
The agency's business bank account will show two lines that need explaining: the deposit coming in and the transfer going out to the trust account. Neither touches the agency's income.
In Achekam, statements for the business account are 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 and a person accepts each match. A line not yet in the books becomes a suggested journal that a person approves, and a reconciliation completes only when no difference remains or every leftover line is explained.
That last step is where the care is needed. The suggested journal for an unexpected deposit should not be approved into a sales or commission account. Instead:
- record the incoming deposit against a liability account, named something like "trust money received in error";
- record the transfer to the trust account against the same liability account, which brings it back to nil;
- write the client's name and the reason in each narration.
If the deposit was already booked to income by mistake, do not delete the entry. A business can post manual journals, an unbalanced journal or one dated in a closed month is refused, and a posted journal is corrected only by a reversal. Reverse the wrong posting and record it correctly, so the ledger shows what happened and how it was fixed.
Money whose owner cannot be found
The second problem is the unclaimed balance. Perhaps a tenant left without a forwarding address and part of the deposit was never refunded, or a small overpayment on a sale sat unnoticed.
Under section 54(10) of the Act, money held in a trust account whose owner or beneficiary could not be identified for longer than three years must be paid into the Fidelity Fund. The Fund must then pay it to the owner or beneficiary on application with sufficient proof. Section 54(11) adds that such money left unclaimed for 30 years from the date the person became entitled to claim it is forfeited to the Fund.
Before that point, the agency should genuinely try to find the owner. A sensible routine:
- list every trust balance with no movement for a long time, with the client's name, the transaction and the date;
- try the last known e-mail address, phone number and the other party's attorney or conveyancer;
- record each attempt and its date;
- when the three-year point is passed with no owner identified, pay the balance to the Fidelity Fund and keep the proof.
Once it is paid over, the agency should be able to tell anyone who later comes looking where their money went.
When the agency stops trading
Section 54(9) of the Act requires a practitioner to wind up its trust and investment accounts immediately and pay the balances to the people entitled to them if its Fidelity Fund certificate is refused, withdrawn or lapses without renewal, if it stops acting as a practitioner, or if it becomes disqualified under section 50.
An agency that is closing, merging or simply letting its certificate lapse needs its trust records in good order before that happens, because each balance has to go to its rightful owner. Untraceable balances become very hard to deal with on a deadline.
The full text of these rules is on Acts Online's page for section 54 of the Property Practitioners Act, covering the duty to keep separate trust accounts, investment and payment out. The wider duties are summarised in section 54 trust accounts, and where deposits flow through a conveyancer, see commission paid by the conveyancer.
This month, go through the business bank statements for the last quarter, look for any deposit that should have gone into trust, and list every trust balance that has not moved in a long time.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
