The pitfalls of trustless accounting: Why you should be concerned

In property management, trust accounting is often seen as complex, time-consuming, and stressful. That’s why a new model has been gaining attention: “trustless accounting.” It promises to take the headache out of compliance by removing the need for a traditional trust account altogether.

At first glance, it sounds like the perfect fix. No reconciliations, no audits, no separate bank accounts. But before you dive in, it’s worth asking some important questions. Because what looks simple on the surface can hide risks that could put your agency in a very vulnerable position.

What is trustless accounting?

Trustless accounting is where your property management software provider collects rent and bond payments on behalf of your landlords and tenants, instead of the money passing through your agency’s trust account. In theory, this removes the need for you to manage compliance, since you’re not handling the money directly.

But there’s a catch. If the platform is taking funds on your behalf, you need to know who is actually holding the money, how it is safeguarded, and what protections are in place if something goes wrong.

The licence question nobody is asking

Here’s something most agencies don’t realise: if a software company is taking rent or bond payments into its own accounts, it may need to hold a financial services licence. Without one, your business could be exposed if funds are mismanaged, delayed, or disputed.

Ask yourself: does your trustless accounting platform have a financial licence? Most don’t. And while they may claim their model is legitimate, without proper regulation your agency has little protection. The risk ultimately falls back on you.

Tenants could be footing the bill

Another hidden pitfall comes from how some trustless accounting providers make money. In Australia, it’s illegal to pass on certain payment processing fees to tenants. Despite this, some platforms charge tenants directly for using the service.

For example, some providers have faced criticism for on-charging tenants. Not only does this create a poor experience for renters, it could also expose your agency to compliance issues if the practice is challenged. Nobody likes having awkward conversations with renters about why they are paying extra just to pay their rent.

Limited flexibility with payment scenarios

Trustless accounting is not as universal as it seems. In some states, agencies are legally required to maintain a trust account to process bond payments and Centrepay transactions. “Direct to landlord” systems also struggle with complex arrangements, such as those found in commercial leases or social housing, where multiple payment schedules and obligations need to be managed.

This limited flexibility means agencies often end up running a hybrid model, using trustless accounting for some payments while still managing a trust account for others. Instead of reducing complexity, it creates more systems to juggle, more potential points of error, and more compliance risk.

Why the “easy way out” can backfire

On the surface, trustless accounting feels like it removes responsibility. But in reality, it introduces new risks:

• Funds may not be protected by proper licensing or regulation.
• Your agency could still be liable if money is delayed, mishandled, or misallocated.
• Tenants may be unfairly charged, putting your reputation at risk.
• Landlords may lose confidence if payments aren’t reliable or transparent.
• Some payment types cannot be handled through trustless models, forcing you to maintain extra systems.

Instead of reducing your workload, you could end up spending more time dealing with disputes, compliance concerns, and unhappy clients.

What property managers should look for

If you’re considering a trustless accounting platform, here’s a checklist to protect your agency:

• Confirm if the provider holds a financial services licence.
• Ask where the money is held and how it is safeguarded.
• Check if tenants are charged any additional fees.
• Ensure the platform complies with Australian property management legislation.
• Consider whether the model truly reduces risk, or just shifts it.
• Assess whether the system supports all the payment scenarios you actually need.

Some food for thought

Trustless accounting may sound attractive, but it comes with pitfalls that many agencies overlook. If the platform isn’t licensed, if tenants are being charged, or if funds aren’t fully protected, your agency could face serious consequences. And if you still need to maintain a trust account for certain payments, then the promise of simplicity quickly falls apart.

Property management already carries enough responsibility. The last thing you need is to rely on a system that could leave your business exposed. Choosing a compliant, transparent solution is the safer path - for your agency, your landlords, and your tenants.

How Reapit has you covered

If you want to safeguard your agency using the industry best practice trust accounting, come and learn about our newly launching trust accounting solution at Reapit. We give you a sneak peak at our Evolve Showcase where you can register your early interest for when we launch.

Join hundreds of other agencies as they watch and learn about our new solution by registering for our Evolve Showcase via this link. See you there!