What happens when a house deposit is stolen due to the real estate agent being hacked?

In a world where the use and reliance of communicating and transacting online is ever increasing, new areas of vulnerability are being exposed and exploited as fraudsters become more sophisticated. The case of Deligiannidou v Sundarjee in the New South Wales Supreme Court involved a situation where deposit funds were accidentally paid into a fraudulent account instead of the real estate agent’s trust account. 


Key Facts


On 31 January, 2020 the real estate agent sent email correspondence to the purchaser directing them to pay the deposit by EFT into the real estate agent’s trust account.
On 9 February the purchaser received an email purporting to be from the real estate agent with an attached invoice and payment details, requesting that the purchaser pay the deposit as soon as possible. This was in fact a fraudulent email and the account details provided were for a fraudulent account, not the real estate agent’s trust account.
The purchaser paid the balance deposit into the fraudulent account. The purchaser provided a screenshot of the payment to the real estate agent who also failed to notice that the funds were paid into the incorrect account.
On 19 March the sellers (who had had no direct dealings with the purchasers) served a notice of termination of the Contract on the basis that the balance deposit had not been received by either the sellers or the real estate agent (who was the appointed stakeholder to receive the deposit).


The Court’s Decision

The Court held that the agent did not have authority to authorise the payment to be made by EFT as the contract specifically provided that the deposit was to be paid by cash or cheque. Accordingly as the buyer had paid the deposit by an incorrect means they were in breach of the contract and the seller was entitled to terminate the contract.


Applicability to Queensland

Unlike the format of contracts usually used in NSW, in Queensland the reference schedule of the REIQ contract includes the provision for BSB and account details of the deposit holder to be completed. Standard condition 2.2 (1) of the current REIQ contract states ‘The Buyer must pay the Deposit to the Deposit Holder at the times shown in the Reference Schedule.’ The standard conditions of the REIQ contract do not specifically require the buyer to make payment of the deposit using the BSB and account details provided in the schedule. Although the REIQ reference schedule does provide for the BSB and account details for the deposit holder to be entered, the inclusion of this section is for convenience purposes only and does not form a direction compelling the buyer to pay a deposit via EFT into that account. Therefore a buyer who pays the deposit by EFT into an agents trust account even if those details have been changed from what is in the contract will arguably not be in breach of the contract.
In any event if the agent’s computer system is hacked then the agent will be liable for any deposit money paid into the wrong account.
Although the applicability of Deligiannidou v Sundarjee to REIQ contracts in QLD cannot be decisively determined without a Court decision, the fact that fraudsters are becoming dangerously more sophisticated is shockingly clear. The importance of verifying the legitimacy of account information provided to you via email, especially when it comes to large sums of money, is without a doubt worth the extra effort.