Real Estate agency keeps $100k in bond payments for itself

PHOTO: David Sharma failed to lodge nearly $100,000 in bond payments while operating a property management company. Photo / Supplied

According to the NZHERALD a disgraced property manager failed to lodge $100,000 in bond money to Tenancy Services and instead sunk the money into his own business.

David Sharma appeared before the Real Estate Agents Disciplinary Tribunal last month facing a charge of misconduct (disgraceful conduct) brought against him by the Complaints Assessment Committee.

It was in relation to his failure to lodge 49 bond payments, totaling $92,210, between the period of 2012 to 2018.

Sharma, who has a history of misconduct within the industry, instead used the money within his property management business.

Tenants are required to pay a bond – usually to the value of two to four weeks’ rent – which is held by Tenancy Services in the event they damage the property or leave before their contract ends. Once they’ve exited the property and filled their contractual obligations, their bond money is returned to them.

Sharma was a director and shareholder of Property Management Out West Limited, a property management company trading as Ray White Henderson. He ran the business through a franchise arrangement with Ray White New Zealand (Ray White).

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As part of his business, Sharma, who is no longer a licensed real estate agent, collected rental bond payments from tenants in connection with the management of properties. By law, he was required to forward those bond payments to Tenancy Services.

Following Sharma’s hearing, which he attended via audio-visual link from his bed at the rest home where he is currently residing, the tribunal released its decision in which it upheld the charge.

It said Sharma had accepted the charge and apologised for his actions, saying “mistakes were made”.

The ruling said Sharma’s misconduct came to light in 2018 when he advised Ray White he intended to close his business and terminate the franchise agreement as he was going into voluntary liquidation. He reportedly owed creditors around $1 million.

Shortly after, multiple tenants and landlords contacted Ray White raising issues about the company’s failure to lodge bond payments with Tenancy Services.

Eventually, a liquidator was employed to conduct a forensic audit, and the police and Real Estate Agents Authority were notified.

However, the police abandoned its investigation in 2020, the decision stated.

At the time, the liquidator estimated around 12 tenancy bonds hadn’t been lodged. But according to the tribunal’s decision, that figure eventually ballooned to 49.

Ray White ended up paying the money that was owed from their own pocket – hoping to recoup it from Sharma following an investigation.

During the hearing, the tribunal heard from a number of witnesses, including another property manager at Sharma’s business, who said she became aware some bonds hadn’t been lodged when a number of tenants moved out and submitted a bond refund form.

The missing payments were raised with Sharma who would then authorise the accounts staff to belatedly lodge the bond money with Tenancy Services or to pay it to the tenant directly. The woman said this happened a lot.

Another woman, who had worked for Sharma in accounts, told the tribunal that after bond payments had been received by a tenant or landlord a separate cheque was then sent to Tenancy Services.

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However, Sharma was the only one who issued the cheques and the only one with access to the company’s bank accounts.

The tribunal heard that during the investigation period, Sharma acknowledged he was responsible for lodging the bonds.

While initially denying the allegations, claiming his paperwork had not been in order and that the bonds had been kept in a folder and lodged many years later, he eventually accepted that he had failed to place $92,210 worth of payments with Tenancy Services.

He said mistakes were made and apologised for the stress caused to all, including his family.

“If he had the chance, he would get in touch with the others and apologise,” the decision stated.

However, the tribunal described Sharma’s conduct as disgraceful.

“It is self-evident that what is effectively the theft of just over $92,000 in almost 50 transactions is a marked and serious departure from the expected standard of a professional real estate agent, which would be regarded by agents of good standing and by reasonable members of the public, as disgraceful.”

The penalty orders will be determined on the papers.

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This was not the first time Sharma has found himself in hot water for his professional conduct.

In 2014, he was reprimanded by the Real Estate Authority for failing to notify potential buyers of a property that there was meth contamination above recommended health levels.

Earlier in 2013, the authority found Sharma had engaged in unsatisfactory conduct in the promotion of another property he was tasked with selling.

And in 2010, Sharma was the subject of an Employment Relations Authority decision after telling an employee to “show him her nipples” and told her to “f*** off and don’t come back”.