Handling Clients Money

Question 1

What are some of the key obligations associated with collection of monies?

Answer 1

1. Have a thorough understanding of the relationship between landlord and occupiers
2. Understand all relevant documents, such as leases and licences
3. Maintain a database to record financial position of occupiers
4. Put payment processes in place, clear for occupiers
5. Have a mechanism in place to notify any default in payment or dispute over payment
6. Have a process to forward client money to the landlord

Question 1

What are the requirements under RICS Real Estate Management for rent demands?

Answer 1

You should submit rent demands in a timely manner and ensure they are clear and understandable by tenants → relevant taxation should be included in the demand

Question 2

What are the requirements under RICS Real Estate Management for rent arrears?

Answer 2

You should ensure you have efficient systems to monitor rents collected
→ issue standard letters chasing arrears
→ keep client informed

Question 3

How can you protect the security of Client Money?

Answer 3

By ensuring you/your firm are registered with the RICS Client Money Protection Scheme - A scheme that reimburses landlords and tenants should an agent misappropriate rent, deposits or other client funds

Question 4

What is a reconciliation (client money)?

Answer 4

Monthly exercise that formally documents the agreement of the bank statement balance to the total of Client money held
→ Showing cashbook, ledger, and bank statement balances, with any reconciling items clearly explained

Question 5

What controls should be in place relating to holding Client money?

Answer 5

• Keep records and accounts that show all dealings with Client money and demonstrate that all Client money held by the firm is held in a Client money account
• Complete regular account reconciliations and demonstrate these are reviewed by a principal
• Ensure that overdraw balances are prevented by the firms systems and controls, if these do occur, investigate immediately
• Publish written procedures for handling Client money → make this available
• Have appropriate systems and controls to ensure transfer or withdrawal of Client money, in accordance with instructions from the Client