Real estate management

a formal client account and be able to show and explain paid. If payment is still withheld, you could take legal
readily at any time all dealings with that money. advice. Alternatively, you could consider:
Clients’ money should be held separately from other • negotiation – this might involve agreeing a phasing
monies and agents should be able to account immediately of the payment, if your client is experiencing financial
for all the funds held. No deductions should be made difficulties
from clients’ money without written permission from the • mediation
client. You should also ensure that you obtain your client’s
consent at the time of any deduction or that you give your • conciliation
client sufficient notice prior to the deduction to object to it. • arbitration.
You should be able to account immediately for any money
that you hold on behalf of a client. Whichever method you use to recover outstanding debts,
you should continue to seek payment by way of telephone
In addition, you should advise your clients in writing that
follow-up and to maintain contact with your client. If you
you will not be liable to repay lost money through bank
are aware that they are in financial difficulties, you should
failure.
try to negotiate a payment plan with them.
Money should only be withdrawn from a client’s account in
Before taking any legal action, you should seek advice
the following cases:
from your legal advisers.
• where it is properly required for payment to, or on
behalf of, the person entitled to ask for it 8.5 Insurance
• for payment of any remuneration or reimbursement
You should ensure that you have all the necessary
of expenses in carrying out estate agency services to
insurances in place for your business. The insurances you
which the estate agent is entitled, with the agreement
should consider will depend upon the country within which
of the client. Such agreement should be evidenced in
you practise, with some insurances being mandatory in
writing
certain countries.
• in the exercise of any lien to which the agent is entitled
• for transfer to another client account 8.5.1 Professional indemnity and errors and
• when non-client money has been used to open or omissions insurance
maintain the account. If you are self-employed, or a senior manager of a
company providing real estate management services,
Bank charges should not be debited from a client account, you should ensure that all your professional work and
but from your office account. that of your professional staff is covered by adequate
In the case of a dedicated client bank account, it is and appropriate professional indemnity insurance. This
common practice to debit bank charges; however, it is will protect you from the consequences of a liability to
advisable to obtain the written permission of the client in pay damages to a third party in respect of breaches of
advance and to take steps to ensure that the account does professional duty committed in the course of professional
not go overdrawn as a result of the charges. activities. It will also protect your clients from suffering
financial loss that you or your company are not able to
A client account should at all times be in credit. There meet.
should not be any ‘borrowing’ from one client’s fund to pay
another client or those entitled to receive money from the
latter’s account.
8.6 Training and keeping up to
date
8.4 Recovering outstanding In order to maintain your skills and expertise in your sphere
debts of activity and in the real estate market you should keep
up to date regarding all issues that may affect your work.
Direct deduction of fees from a client account or from sale These may include:
proceeds by a lawyer is the easiest way to avoid problems
over payment. However, this should not be done without • legislation
the prior authority of the client • regulation
If you do not receive payment of a client’s invoice within the • policies
time period specified in your terms of engagement (and on
• the state of the real estate market
the invoice), your first step should be to write to the client to
remind them that this is outstanding, giving them a further • general economic conditions
reasonable period in which to pay. If you intend to charge • property values
interest, you should refer to this in your letter.
• interest and lending rates, where applicable.
If you still do not receive payment, this step should be
followed up with a telephone call to ensure that the client This could include reading relevant publications, internet
has received the invoice and to agree when this will be and other research, attending training and conferences

27 RICS professional statement, global Effective from 1 November 2016

 rics.org

and reading RICS guidance material. Where you are

managing other real estate managers, you should ensure
that support is provided to allow them to keep up to date
as well, and to attend relevant training events. Ensure
that arrangements are in place to mentor junior staff and
to enable new members of staff to be introduced to the
international and local standards applicable to their work.
The continued development of your expertise and that
of your staff will ensure that real estate management is
conducted with skill and professionalism and within all
legislative requirements as well as within the requirements
of this professional statement.

Effective from 1 November 2016 RICS professional statement, global 28