Buying or selling a rent roll is one of the most significant transactions an agency will undertake. Yet, despite the size and importance of these deals, critical compliance and data issues are still being overlooked — often until it’s too late.
In a recent discussion with Sonia Rahme from Askew Williams & Associates, we explored what really happens behind the scenes of rent roll transactions — and where things most commonly go wrong.
Sonia Rahme and Matt Ciallella discuss the potential risks and complications that can occur during a rent roll transaction and how they can be prevented.
The Biggest Mistake: Assuming Your Data is Clean
One of the most common assumptions vendors make is that their rent roll is “ready to sell.”
But in reality, many portfolios contain:
- Unarchived properties
- Outdated or inactive tenancies
- Incorrect tenant and owner records
- Incomplete or missing documentation
Over time, as staff change and systems evolve, data integrity declines. What gets presented as a 500-property rent roll may be significantly different once properly reviewed.
THE TAKEAWAY:
If you don’t know exactly what’s in your rent roll, neither will the buyer – and that creates risk on both sides.
Trust Accounts & Unknown Funds: A Hidden Liability
Trust account issues are another major concern. Common problems include:
- Unreconciled accounts
- Long-standing adjustments
- Unknown funds sitting for years
- Legacy data carried across software systems
While these issues may technically remain the vendor’s responsibility, the reality is that buyers inherit the operational consequences — dealing with tenant disputes, incorrect balances and compliance risks.
BEST PRACTICE:
Review at least 3–6 months of trust reconciliations and ensure all discrepancies are resolved before settlement.
Settlement: Where Problems Begin to Surface
While much of the focus is placed on pre-sale preparation, many of the most significant issues arise after settlement. Once data is merged into the buyer’s system:
- Errors are embedded
- Missing or unmatched bonds
- Unknown funds
- Inconsistent data formatting
At this stage, the focus shifts from prevention to damage control.
Bonds: The Critical Compliance Gap
Bonds are a non-negotiable component of any rent roll — yet they are one of the most frequent areas of inconsistency.
Post-settlement audits regularly uncover:
- Properties with no bond lodged
- Bonds held under incorrect agent details
- Data mismatches between software and bond authority records
- Duplicate or missing bond entries
In some cases, bonds were never transferred between agencies — leaving the current managing agent exposed.
THE RISK:
If the bond isn’t where it should be the liability sits with the managing agent.
Commercial Properties: The Overlooked Complexity
Commercial portfolios introduce an additional layer of risk.
Unlike residential bonds, commercial bonds may be held as:
- Bank guarantees
- Cash bonds
- Solicitor-held funds
- Investment accounts
Without proper registers and documentation, agencies can lose track of:
- Where bonds are held
- Expiry dates
- Reference details
- Legal ownership
In long-term leases this becomes a serious issue when tenants vacate, and funds need to be recovered.
Post-Settlement: Unknown Funds and Ongoing Issues
A key issue that continues to surface post-settlement is the handling of unknown funds.
These funds — often carried across systems over time — can create ongoing reconciliation challenges, disputes, and compliance risks for the buyer. Without clear records or ownership, resolving these amounts becomes time-consuming and complex, adding unnecessary operational strain long after settlement is complete.
The Solution: Early Intervention
The consistent theme across all transactions is simple: The earlier issues are identified, the easier they are to fix.
Engaging the right professionals — brokers, auditors and compliance specialists — before and during the transaction process can:
- Protect the value of the rent roll
- Reduce settlement risk
- Ensure smoother integration post-sale
- Prevent long-term operational issues
Final Word
A rent roll is only as strong as the data and compliance behind it.
What looks like a clean, high-performing portfolio on paper can quickly unravel without the right due diligence and preparation.
Whether you’re buying, selling or simply reviewing your current position, taking the time to address these areas is not just best practice — it’s essential.
Sonia Rahme is an Audit Specialist with Askew Williams & Associates and can be reached at sonia@askewwilliams.com.au | askewwilliams.com.au.