Mechanically, the Settlement Agents Act 1981 sets the rules for who may act as a settlement agent in Western Australia, how they obtain and keep a licence, what they may charge and do at settlement, how client money must be handled, how accounts must be audited, and how consumers can be compensated for certain losses. Key administrative roles are given to the Commissioner (who administers licensing and many powers under the Act), the chief executive officer (who administers the statutory accounts), and the State Administrative Tribunal (which hears reviews and disciplinary matters) (see sections 3, 24, 26, 87, 23, 34AA, 93).
The Act distinguishes two classes of practitioner: real estate settlement agents and business settlement agents, defines when a person or firm is a settlement agent, and lists specific exceptions (for example, legal practitioners and some licensed real estate/business agents in certain circumstances) (see sections 3 and 4).
Who is affected
Settlement agents (individuals, firms and corporations) and their staff: they must be licensed, hold current triennial certificates to practise, and comply with conduct, record‑keeping and trust‑account rules (see sections 26, 30, 31, 34, 49, 45).
Clients and other parties to settlements: they gain statutory protections about how money is held and how fees must be authorised and disclosed (see sections 49, 43, 50).
Banks and authorised financial institutions: they have duties to co‑operate with auditors and authorised investigators and to pay interest to the Interest Account on trust balances (see sections 49B, 59, 81).
The Settlement Agents Act 1981 (WA) is the principal statute governing the licensing, regulation, and supervision of settlement agents in Western Australia. A settlement agent is the professional who handles the conveyancing process on settlement day: they complete the formal transfer of title or ownership by coordinating payment of the balance of the purchase price and the delivery of the relevant transfer documents.
The Act creates a mandatory licensing regime for anyone who arranges or effects settlements of real estate transactions (property conveyancing) or business transactions (business sales) for reward. It imposes strict trust account obligations, requires annual audits, establishes a Fidelity Guarantee Account to compensate victims of settlement agent defalcations, and creates disciplinary powers exercised by the State Administrative Tribunal.
Administration transferred substantially to the Commissioner for Fair Trading (under the Fair Trading Act 2010) and the State Administrative Tribunal following the 2010 amendments, which deleted the earlier industry board structure (Part II) that had previously governed the profession.
Main concepts
Settlement: The completion of a real estate or business transaction by payment of the balance of the purchase price (section 3 definition).
: A person who arranges or effects the settlement of a real estate transaction for reward, or who carries on such a business (section 3). Real estate transactions include the disposal and acquisition of land and associated property within Western Australia.
Current sections
Direct links to the current provisions in Settlement Agents Act 1981.
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Authorised Version
The authorised version of this legislation is published by the jurisdiction's legislation service. Follow the link below to read or download it from the official source.
Sourced from the Western Australian Legislation website (legislation.wa.gov.au). Not the authorised version.
The Commissioner, the chief executive officer (CEO) and the State Administrative Tribunal (SAT): they hold decision and enforcement powers — licensing, imposing special conditions, ordering audits, appointing supervisors, handling disciplinary proceedings and managing statutory accounts (see sections 34AA, 51, 69, 74, 84, 87–90).
How it works (important mechanics and obligations)
Licensing and qualification: applicants must meet age, character, resource and residency tests; firms and corporations must show responsible people are licensed or meet thresholds; triennial certificates are required to carry on business (see sections 27–29, 31). The Commissioner decides on applications and may grant licences without notice in routine cases (see sections 24, 34A).
Conditions, special conditions and review: the Commissioner can impose or remove special conditions on licences (including conditions about fee payments and contributions to statutory accounts) but must give notice and consider submissions; affected persons may seek review by SAT (see sections 34AA, 34AB, 23).
Trust money and accounting: licensees must maintain one or more designated trust accounts at authorised institutions, lodge client money promptly, keep separate and accurate records, balance monthly, and make trust accounts available for audit (see sections 49, 45, 49C, 49A, 50, 51, 58, 61). Separate interest‑bearing accounts can be requested by clients (section 49A).
Audits and enforcement: annual audits (with additional initial quarterly and termination audits in some circumstances) must be done by approved auditors; auditors report breaches to the Commissioner; the Commissioner may order or nominate audits and can disqualify auditors (see sections 51–56, 60–63). If there are concerns about trust accounts, the Commissioner may apply to SAT for restraining orders, suspension and the appointment of supervisors with powers over accounts and business (see sections 73–76).
Remuneration and disputes: agents must hold a valid written appointment to be entitled to remuneration, must provide a remuneration scale on request, and the Commissioner (with ministerial approval) can set maximum fees; there are criminal and civil penalties for unauthorised fees (see sections 43–44).
Fidelity Guarantee Account and related funds: the Act establishes three statutory accounts — the Fidelity Guarantee Account to reimburse certain losses from defalcation (administered by the CEO) (see sections 87–95); the Education and General Purpose Account for administrative and educational costs (sections 102A–102D); and the Interest Account to receive prescribed interest from trust accounts and to fund the other two accounts (sections 103–106). Applicants pay a prescribed contribution on application (section 92); the CEO can impose small annual levies on certificate holders if funds are insufficient (section 94). The CEO has discretion over claims, time limits and priorities (see sections 93, 95, 98).
Discipline and sanctioning: the Commissioner can refer allegations to SAT; SAT can reprimand, fine, suspend or cancel licences and impose disqualifications; certain criminal convictions automatically cancel licences (see sections 82–86, 85).
Who pays and where costs fall (mechanics)
Licensing and renewal fees and the prescribed initial payment ($150 or approved sum) are paid by applicants and credited to the Fidelity Account (see section 92). Licensees pay audit fees (section 66) and, where required, premiums under any Master Policy arranged under section 35 (section 35(6)(d)). If the Fidelity Account is insufficient, the CEO may levy certificate holders up to prescribed amounts (section 94). If the Commissioner commissions an audit under section 69 and directs the settlement agent to pay, that cost falls to the settlement agent, otherwise it may be paid from the Fidelity Account (section 71).
Discretion, compliance burden and implementation risk
Broad administrative discretion: the Commissioner has wide operational discretion — licensing decisions (sections 24, 27–29), imposing special licence conditions including financial contributions (section 34AA), approving auditors and cancelling approvals (section 56), ordering audits (section 69) and requiring information from settlement agents and banks (sections 81A, 81). Those discretions shape compliance costs and the practical scope of activity.
Compliance workload for practitioners: obligations to maintain trust accounts, keep separate records, balance monthly, provide receipts, undergo annual (and sometimes quarterly or termination) audits, and promptly notify account openings/closures impose ongoing administrative and cost burdens on licensees (see sections 49, 50, 51, 49C, 45).
Safeguards and review: SAT provides review and disciplinary oversight of Commissioner decisions (sections 23, 83–84), and the Act requires notice and opportunity to make submissions before special conditions are imposed or removed (sections 34AA(4)–(5), 34AB(2)). These procedural requirements moderate but do not eliminate administrative discretion.
Trade‑offs and behavioural effects (mechanism, not judgement)
The Act restricts who may perform settlement functions (licensing, non‑transferable licences, single business name limits) which reduces the set of people and entities legally able to carry out settlements but ties that access to qualifications, financial resources and conduct rules (see sections 26, 40, 27, Schedule 1). Those restrictions create compliance costs for entrants and ongoing obligations for incumbents.
Consumer protection mechanisms (trust‑account rules, audits, Fidelity Guarantee Account) shift some risk of agent misconduct away from individual clients by requiring segregation of client money, audits, and a fund (sections 49, 51, 87–95). The Act funds these protections partly from contributions and levies by applicants and certificate holders (section 92, 94) and by interest collected from trust accounts (section 49B) which flows through the Interest Account (sections 103–105).
Practical notes on limits and exemptions
Certain institutions are exempted from trust‑account and Fidelity Account requirements when acting in their capacity as banks or trustee companies (section 4(2)). Legal practitioners are excluded from the settlement agent definition when acting in the course of legal practice (section 4(1)(a)).
The Act expressly allows a Master Policy for fidelity and professional indemnity insurance arranged by the Commissioner (section 35) and sets a minimum per‑claim cover in such a policy (section 35(3)).
Where to look in the Act for the main rules
Definitions and scope: sections 3–4. Licensing and certificates: Part III (sections 24–41B). Trust accounts and audits: Part IV Division 2 (sections 48–76). Discipline: Part IV Division 3 (sections 82–86). Fidelity Guarantee and related accounts: Parts V–VI (sections 87–106). Commissioner powers and review by SAT: scattered (notably sections 23, 34AA, 69, 73–79).
This summary describes the statutory mechanisms — who decides, who pays, what practitioners must do, and how remedies and compensation are arranged — with references to the sections that set those mechanics (as cited above).
Real estate settlement agent
Business settlement agent: A person who arranges or effects the settlement of a business transaction for reward, or who carries on such a business (section 3). Business transactions include the disposal and acquisition of businesses, shares in businesses, and their goodwill.
Licence: The formal authority to carry on business as a settlement agent, granted by the Commissioner. Separate licences exist for real estate settlement agents and business settlement agents; a person may hold both.
Triennial certificate: A certificate granted to a licensee to carry on business for a three-year period. Both a current licence and a current triennial certificate are required to lawfully operate (section 26). The distinction matters for trust account and fidelity obligations.
Defalcation: Defined broadly in section 3 to include criminal or fraudulent conduct of a licensee, their servants, agents, or partners, or directors of a body corporate licensee, in the course of business resulting in pecuniary loss or property loss to any other person.
Fidelity Guarantee Account: The State-backed compensation fund established under section 87, funded by licensee contributions, levies, and recoveries. Used to reimburse persons who suffer pecuniary or property loss from defalcation by a licensed settlement agent.
Trust account: An account maintained exclusively for moneys received by the settlement agent on behalf of clients. Strictly segregated from the agent's own funds.
Commissioner: The Commissioner for Fair Trading under the Fair Trading Act 2010 (section 3). Holds licensing, investigation, and audit powers.
SAT: The State Administrative Tribunal, which reviews licensing decisions and exercises disciplinary and trust account restraint powers.
Who it affects
Settlement agents (real estate and business): Must hold a current licence and triennial certificate, maintain trust accounts, comply with audit requirements, pay into the Fidelity Guarantee Account, and follow the code of conduct.
Licensed real estate agents and business agents: Under sections 26A and 26B, real estate and business agents licensed under the Real Estate and Business Agents Act 1978 may apply for an exemption allowing them to handle settlements for transactions in which they acted as agent, without separate licensing, provided the settlement is not done for reward and the required warning notice is given.
Legal practitioners: Exempt from the Act when acting in the course of their profession (section 4(1)(a)).
Banks and trustee companies: Section 4(2) exempts banks and trustee companies acting as settlement agents from most of the trust account (Division 2 of Part IV), fidelity (Part V), and some other obligations.
Clients of settlement agents: Benefit from trust account protections (their money cannot be used to pay the agent's other creditors), audit oversight, and the Fidelity Guarantee Account as a backstop.
Financial institutions (authorised financial institutions): Must pay interest on settlement agents' trust accounts to the Settlement Agents Interest Account (section 49B). Must disclose certain information about trust accounts to authorised persons (section 81).
Auditors: Must be approved by the Commissioner, must conduct annual audits of trust accounts, and must report breaches of law to the Commissioner (section 62).
Key obligations
Licensing (section 26): No person may carry on business as a settlement agent, or hold themselves out as one, after the appointed day without a current licence and triennial certificate. Penalty: $100,000.
Trust accounts (section 49): Every licensee with a current triennial certificate must maintain one or more trust accounts exclusively for client money. All client money must be paid into trust as soon as practicable. Trust account money cannot be used for the agent's debts, cannot be garnished by the agent's creditors, and can only be withdrawn to complete the settlement, in accordance with the contract, with written consent of all parties, or as otherwise authorised.
Settlement money restrictions (section 49(4)): Settlement moneys received in the course of arranging or effecting a settlement shall not be withdrawn from trust except to complete the settlement, in accordance with the contract, or with the prior written written consent of all parties.
Record-keeping (section 49(6)): Licensees must keep full and accurate accounts; enter all receipts and payments before the end of the next business day; keep accounts conveniently auditable; and correctly balance monthly.
Receipts (section 50): When a settlement agent receives money, they must (unless received by electronic transfer) immediately give a receipt. All receipts must be prenumbered.
Trust account notifications (section 49C): Settlement agents must notify the Commissioner when they open or close a trust account. Both the agent and the bank must notify the Commissioner if a trust account becomes overdrawn.
Annual audits (section 51): Settlement agents must appoint an approved auditor. Audits of trust accounts must be conducted annually for the period ending 30 June. The auditor's report must be lodged with the Commissioner.
Auditor's report content (section 60): Reports must state whether the accounts are properly kept, whether the balance is supported by client funds, whether there has been any deficiency, and any other prescribed matters.
Mandatory reporting by auditor (section 62): Auditors must report to the Commissioner any breaches of the Act discovered during an audit.
Fidelity Guarantee Account payments (section 92): Each applicant for a licence or renewal of a triennial certificate must pay $150 (or such other sum as approved) to the Account.
Powers and discretions
Commissioner (licensing):
May grant or refuse licences and triennial certificates (Part III).
May impose conditions (section 34), including special conditions (section 34AA) on licences and triennial certificates.
May grant a licence or triennial certificate without notice to the applicant in certain cases (section 34A).
May change the annual audit date (section 52).
May conduct own-motion audits of trust accounts (section 69) and recover the cost.
May obtain information about trust accounts from financial institutions (section 81A).
May require information to support fidelity claims (section 102AA).
SAT (disciplinary and trust account):
May suspend a licence in some cases (section 34B).
May restrain a bank from dealing with a settlement agent's account (section 73).
May suspend a settlement agent, appoint a supervisor, and vest the agent's books and records in the supervisor (section 74).
Has additional powers to make consequential orders (section 79).
Exercises disciplinary powers on allegations of cause for disciplinary action (sections 83-84).
Chief executive officer (fidelity claims):
May settle or allow claims against the Fidelity Guarantee Account (section 95).
May impose levies on triennial certificate holders (section 94).
May require information from claimants (section 102).
May investigate fidelity claims (section 102AA).
May advertise for claims against a defaulting licensee (section 101).
Auditors: May require production of all documents and information from the settlement agent and from the bank (sections 58-59).
Penalties and enforcement
Unlicensed practice (section 26): $100,000 fine.
Trust account violations: Sections 65 of Part IV Division 2 create a range of offences for trust account failures. Specific offences include: receiving money without issuing a receipt; withdrawing trust money except as authorised; failure to keep required records; failure to notify the Commissioner of overdrawn accounts.
Obstruction of supervisors (section 77): It is an offence to hinder or obstruct a supervisor appointed under section 74.
Breach of SAT orders (section 80): It is an offence to breach a section 73 (bank restraint), section 74 (supervision), or section 78 (variation) order.
General penalty (section 120): Any offence against the Act for which no specific penalty is provided: $2,000.
Directors' liability (section 117): Directors of a body corporate licensee are jointly and severally personally liable for defalcations by that licensee.
Disciplinary powers (section 84): SAT may cancel, suspend, or impose conditions on a licence or triennial certificate; censure or reprimand a licensee; or require a licensee to pay a fine not exceeding $5,000.
Mandatory cancellation (section 85): Certain criminal offences automatically cause the cancellation of a licence and triennial certificate.
Proceedings limitation (section 121): Proceedings must be brought within 3 years of the offence, or with the Minister's consent at any later time.
Process and timelines
Licensing:
Applications in writing in the form determined by the Commissioner (section 24).
Commissioner must give applicants opportunity to respond before an adverse decision (section 24(5)).
Licences once granted are of indefinite duration, but a triennial certificate (required to carry on business) must be renewed every 3 years.
Triennial certificate renewal (sections 31-33):
Standard renewal: application before certificate expires.
Late renewal: allowed within 12 months after expiry.
Late renewal after 12 months: requires additional process.
Audits (sections 51-52):
Annual period: 12 months ending 30 June.
Commissioner may change the date for any licensee.
Auditor's report must be lodged within the prescribed period after the audit period.
Fidelity claims (section 93):
Claims must be notified within 3 years of awareness of the defalcation (primary limitation).
Within 6 years if the chief executive officer considers it just and reasonable.
The claimant must exhaust all relevant rights of action against the defaulting licensee before commencing action without the chief executive officer's leave (section 95(1)).
Subrogation (section 97):
On payment from the Account, the State is automatically subrogated to all rights of the claimant against the defaulting licensee.
The State v ASIC [2020] FCA 810 case demonstrates that the State will use corporate law mechanisms (such as reinstatement of deregistered companies) to pursue those subrogated rights.
Review (section 23):
Any person aggrieved by a reviewable decision may apply to SAT.
Reviewable decisions include most Commissioner decisions under Part III, trust account decisions under Part IV Division 2, and chief executive officer decisions under sections 93 and 95.
Interactions with other law
Fair Trading Act 2010 (WA): The Commissioner for Fair Trading administers this Act. Investigation powers under section 61 and Part 6 of the Fair Trading Act apply to this Act (section 22). Recoveries under the Fair Trading Act are credited to the Fidelity Guarantee Account (section 88(d)).
Real Estate and Business Agents Act 1978 (WA): Real estate agents and business agents licensed under that Act may apply for exemptions under sections 26A and 26B to conduct settlements for their own transactions without separate settlement agent licensing. The exemption conditions are strict, requiring no reward for settlement services and the giving of a prescribed warning notice.
Financial Management Act 2006 (WA): The Fidelity Guarantee Account is established as an agency special purpose account under section 16 of that Act (section 87).
Trustees Act 1962 (WA): Trust funds in the Fidelity Guarantee Account may be invested in the same manner as trust funds under Part III of the Trustees Act (section 89).
Corporations Act 2001 (Cth): Body corporate settlement agents must have the required number of directors holding current triennial certificates. Directors are personally liable for defalcations (section 117). The State's subrogated rights post-claim may require reinstating deregistered companies under section 601AH(2) of the Corporations Act (as in State v ASIC [2020] FCA 810).
State Administrative Tribunal Act 2004 (WA): The SAT exercises all its disciplinary, trust account, and review functions under this Act through its own procedure under the SAT Act.
Gotchas
Both licence and triennial certificate are required: It is not sufficient to hold a licence. A current triennial certificate is also required. A licensee whose triennial certificate has expired cannot carry on business. Section 26(3) specifically provides that a person required to surrender under section 34D is taken not to be licensed or certificate-holding.
Trust money withdrawal is strictly controlled: Section 49(4) prohibits withdrawal of settlement moneys from trust except to complete the settlement, in accordance with the contract, or with prior written consent of all parties. "Settlement moneys" are the purchase price moneys, not all client money. Agents who release funds early or without authorisation commit an offence.
The director personal liability provision (section 117) is automatic: Where a licensee is a firm with a body corporate partner, or where the licensee is a body corporate, all directors at the time of any defalcation are jointly and severally personally liable. This is not fault-based; the director need not have been involved in or aware of the defalcation.
The exemption for real estate agents is not self-executing: The exemption under sections 26A and 26B requires a formal application and grant of exemption by the Commissioner. It is not automatic. And the exemption only applies if the agent does not charge for the settlement and gives the prescribed warning notice. Failure to give the notice means the exemption does not apply to that settlement.
Fidelity claims are subject to exhaustion requirements: Before commencing an action in court, a claimant must (without the chief executive officer's leave) exhaust all relevant rights of action against the defaulting licensee and any other person. This is a precondition, not just a procedural technicality.
The 3-year claim limitation is counted from awareness, not from the defalcation: Section 93(2) requires notice of the claim within 3 years after the day the claimant became aware of the defalcation. A claimant who was unaware for years after the defalcation still has 3 years from awareness. However, an absolute 6-year outer limit applies (with just and reasonable discretion).
Practical examples
Conveyancing firm carrying on business: A conveyancing company wants to carry on business as a settlement agent in WA. It must apply to the Commissioner for a real estate settlement agent's licence, ensure the required number of directors or representatives hold individual licences and current triennial certificates, pay into the Fidelity Guarantee Account, maintain trust accounts at an authorised financial institution, appoint an approved auditor, and comply with the code of conduct. Carrying on business without a current triennial certificate exposes the company and its directors to prosecution.
Client whose agent has defrauded them: A property buyer's settlement agent misappropriates $200,000 of the buyer's settlement funds. The buyer discovers the defalcation and notifies the chief executive officer within 3 years. The buyer must first exhaust rights against the defaulting agent (or obtain leave to skip that step). The chief executive officer may then allow the claim from the Fidelity Guarantee Account up to the amount of the defalcation, less any amounts recovered from other sources. On payment, the State acquires subrogated rights against the agent.
Reinstating a deregistered company to pursue subrogated rights: The State pays out $444,529 from the Fidelity Guarantee Account to a property buyer under section 93, acquiring subrogated rights under section 97. The defaulting agent was a company that has since been deregistered. The State applies to the Federal Court under section 601AH(2) of the Corporations Act to reinstate the company's registration so the State can pursue the subrogated claim. The court reinstates the company (as in State of Western Australia v ASIC [2020] FCA 810).
Real estate agent seeking exemption: A licensed real estate agent handled the sale of a property and wants to also complete the settlement without separately licensing as a settlement agent. The agent applies to the Commissioner for an exemption under section 26A. If granted, the agent must: not charge for the settlement; give the buyer and seller the prescribed warning notice before beginning settlement; and ensure the exemption remains current. The exemption is personal to the agent and is not transferable.
Section 1
The appointed day is 1 Nov 1982, see *Gazette* 29 Oct 1982 p. 4322.