Unclaimed Money in the Real Estate Trust Account

Sec. 27 (1) of the Real Estate and Business Brokers Act, 2002 (the “Act”) requires that money in a brokerage’s real estate trust account be disbursed only in accordance with the terms of the trust. Sec. 27 (4) and 27 (5) of the Act identify two situations where brokerages are required to pay unclaimed trust monies to the Real Estate Council of Ontario.

Relevant sections of Sec. 27 included the following:

27. (4) If a brokerage holds money in trust for a period of two years and entitlement to the money has not been determined or is unclear, the brokerage shall pay the money to,

(a) the administrative authority; or
(b) if there is no designated administrative authority, the Minister of Finance.

(5) If a brokerage holds money in trust for a period of one year after the person for
whom it is held first became entitled to payment of the money and the person cannot be located, the brokerage shall pay the money to,

(a) the administrative authority; or
(b) if there is no designated administrative authority, the Minister of Finance.

(6) Before the brokerage pays the money under Subsection (5), the brokerage shall
use reasonable efforts to locate the person entitled to the money being held in trust.

(7) When a brokerage pays money over under Subsection (4) or (5), the brokerage shall provide to the administrative authority or to the Minister of Finance, as the case may be, as much information as the brokerage has in order to determine who is entitled to the trust money.

(13) The payment of money held in trust to the Minister of Finance or the administrative authority is made without any prejudice to the rights of any person to claim entitlement to the trust money.

In order to assist registrants in complying with these requirements, the Registrar’s office has developed the following guidelines to be completed by brokerages before unclaimed trust monies will be accepted by the Real Estate Council of Ontario.

NOTE: If the trust money in question was held in an interest bearing account, the unclaimed money paid to RECO will include both the original trust deposit and any interest accrued to the original trust monies up until the time those monies are paid out to the RECO.

Secondly, Sec. 39 of Ontario Regulation 567/05 (GEN) indicates that if the amount of unclaimed trust money held by the brokerage is less than $25.00, then the brokerage is not required to forward unclaimed trust money to RECO. The brokerage may, however, choose to forward unclaimed trust amounts under $25.00 to RECO in accordance the provisions of Subsections 27(6) through 27 (15).

 

Trust Monies Paid Under Sec. 27 (4) of the Act (Entitlement Unclear):

If parties to an aborted transaction have not taken steps to clarify entitlement to title to the trust money, after 2 years, the brokerage must forward the following to the Real Estate Council of Ontario:

    • A cheque representing the amount of the deposit payable to the Real Estate Council of Ontario;
    • A copy of the relevant Agreement of Purchase and Sale and any related documents;
    • A copy of the trade record sheet related to the transaction;
    • A copy of the relevant trust account transaction record or records;
    • Any additional information the brokerage is aware of regarding why entitlement to the trust money has not been determined or is unclear.

 

Trust Monies Paid Under Sec. 27 (5) of the Act (Entitlement Clear: Person Cannot be Located):

Where entitlement to trust money is clear, but the brokerage cannot locate the person it must take reasonable steps to find the person. If the person entitled to the money cannot be located after one year, the brokerage must forward the following to the Real Estate Council of Ontario:

    • A cheque representing the amount of the deposit payable to the Real Estate Council of Ontario;
    • Copy of the Agreement of Purchase and Sale and any related documents;
    • Copy of the trade record sheet related to the transaction;
    • Copy of the relevant trust account transaction record or records;
    • Proof of unsuccessful attempts to contact the entitled person(s) during the 12 months following the determination of the entitlement to the trust money, usually indicated by two postmarked, returned envelopes.

 

For trust money in excess of $500, proof of notice in a local newspaper on one occasion in the area in which the person entitled to payment of the trust monies was last known to have resided or carried on business. The notice must have gone unanswered for at least 6 months. A single insertion is sufficient and a copy of the notice must be provided. Brokerages should place the advertisement as soon as other attempts to locate the person have been unsuccessful.

Registrar’s Bulletin — Unclaimed money in trust account


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