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BCFSA’s information provides clear, concise, easy-to-read explanations of the requirements for real estate professionals under the Real Estate Services Act (“RESA”), Real Estate Services Regulation (“Regulation”), Real Estate Services Rules (“Rules”), and other applicable legislation.
Information is intended for use by real estate professionals, to support their understanding of the standards they must meet in the delivery of real estate services.
(a) Funds to Be Deposited into the Brokerage Trust Account
When clients provide you deposits and other funds that are to be held in the brokerage’s trust account, in most cases, RESA requires that you immediately deliver them to the brokerage. These funds must then be deposited into the brokerage’s trust account. This includes:
- All money held or received from a client in relation to real estate services;
- All remuneration funds received for real estate services including the portion received from another brokerage whether or not it has already been earned; and
- All referral fees received for recommending a product or service to a consumer such as a home inspection or other person in a business relating to real estate.
While RESA requires that all money held and received in relation to real estate service be paid to their brokerage and held in trust the following exceptions exist:
- The money is in the form of a cheque, draft or money order payable to a person other than the licensee or a related brokerage of the licensee,
- The licensee takes no action in relation to the cheque, draft or money order other than delivering it to the person to whom it is payable, and
- Any conditions established by the Real Estate Real Estate Services Rules are met.
While RESA requires that all remuneration earned be deposited into your brokerage trust account, there are exceptions when the remuneration has already been earned. Despite the trust requirement, remuneration that has already been earned, as determined in accordance with the Real Estate Services Rules, by a brokerage may be paid:
- If none of the remuneration is owed to another brokerage (such as a cooperating brokerage), into a commission trust account; or
- If none of the remuneration is payable to either another brokerage or related real estate professional, the funds can be paid into another account (such as a general account) other than the brokerage trust account or commission trust account maintained by your brokerage.
The Real Estate Services Rules state that your brokerage may maintain one or more commission trust accounts. The accounts, however, must be designated as trust both in your brokerage’s records and the records of the financial institution. The only money that may be paid into a commission trust account is money used to pay real estate professionals at the brokerage. Once earned, any further distribution is between the brokerage and licensee and RESA does not apply.
Per RESA if the parties to a transaction you are facilitating agree that monies that would otherwise be deposited into trust can be made payable to a holding brokerage, the following Real Estate Services Rules apply:
- The holding brokerage must deposit the funds into a separate trust account maintained in the name of the service brokerage;
- Funds withdrawn from that brokerage trust account per RESA must be paid as follows:
- If the service brokerage has no related real estate professionals other than the managing broker, in accordance with the instructions of the service brokerage;
- In any other case, at the option of the service brokerage to pay the funds into a brokerage trust account maintained by the service brokerage, or into a commission trust account maintained by the service brokerage.
(a) When Brokerage Acts as Stakeholder
When an offer to purchase property has been accepted by the seller and a deposit has been paid by the buyer, whichever brokerage is to hold the funds per the contract holds the money as a stakeholder. In that capacity, the brokerage is not the agent of either the buyer or the seller.
If the trade in real estate collapses for any reason, the brokerage must recognize that either the seller or the buyer, or both, may lay claim to the deposit money depending on the circumstances surrounding the collapse of the trade in real estate.
Whenever your brokerage holds money in the brokerage trust account, the money is held as a stakeholder unless:
- The parties agree otherwise in writing; or
- Until circumstances established by the Regulation apply.
(b) Exemption from Stakeholder Provisions
The stakeholder provision does not apply to:
- Rents or payments under an option to purchase, if collected on a periodic and regular basis;
- Security deposits and pet damage deposits paid by tenants under the Residential Tenancy Act — will open in a new tab; and
- Payments prescribed by Regulation.
Remuneration can be paid out of trust (where it is held under the stakeholder provision) when it is earned in accordance with the Real Estate Services Rules.
If the money is held in relation to a leasing transaction, it is considered earned the earlier of the date when:
- The lease or assignment of the lease is submitted to the land titles office for registration;
- The tenant has the right to take possession; or
- The tenant lawfully occupies the real estate.
If the transfer is not registerable in the land title office then it is earned on the date the real estate is transferred or on the date where the documents effecting the transfer are submitted to the land title office.
If the funds are not held as stakeholder, they may be withdrawn in accordance with your service agreement or a time otherwise agreed to in writing by your client.
Money paid out of the brokerage trust account must be paid as follows:
- Any portion of the remuneration being paid to a cooperating brokerage must be paid directly out of the brokerage trust account; and
- Any share of the remuneration that is being paid to you as a real estate professional can either be paid directly out of the brokerage trust account or into a commission trust account in accordance with the Real Estate Services Rules and to you from that account.
If you receive a salary and not commission, that salary can be paid to you directly from your brokerage’s general operating account. Please read the Remuneration Guideline for more information.Learn more about remuneration
(a) Rental Property Management
Rental property management service agreements must outline the scope of authority granted to you and your brokerage to authorize cheques and make disbursements on behalf of the client. The agreement must also speak to how security and pet deposits are dealt with.
(b) Strata Management
Strata management service agreements must include an indication of whether your brokerage will be holding one or more of:
- Contingency reserve fund money;
- Operating fund money;
- Special levy money; and
- Other amounts
on behalf of the strata corporation. The strata management service agreement must also include any authority under RESA for your brokerage to transfer funds between brokerage trust accounts or from a brokerage trust account to a pooled trust account for one or more strata corporations.
The service agreement must also outline the scope of authority for your brokerage, on behalf of a strata corporation, to sign cheques, make disbursements, and invest money held by your brokerage on behalf of the strata corporation. When making investments on behalf of a strata corporation, a real estate professional providing strata management services is subject to the same restrictions, if any, that apply under the SPA to the strata corporation in relation to its investments.Learn more about service agreements
If your brokerage provides strata management services, it must maintain a separate trust account in the name of each strata corporation for each of the following: operating funds, contingency funds, and special levy funds (when appropriate).
If your brokerage accepts funds by way of electronic deposit into a pooled trust account that contains deposits connected to other strata corporations, the funds must be divided and paid into the appropriate trust accounts for each strata corporation as outlined above no later than three days after the date on which they were received.
Your managing broker should be aware of the timelines imposed on dividing up funds received by a strata corporation in lump payments. These may include mixes of operating funds, contingency reserve funds and special levy funds, or other trust funds mixed with contingency reserve funds and/or special levy funds. These funds must be divided and deposited into their appropriate accounts or paid to the strata corporation within seven days of the end of the month.
Each of the strata corporation’s contingency reserve and special levy trust accounts held by your brokerage must have at least two signatories in order for money to be withdrawn. These can be any combination of:
- A related managing broker;
- A member of the council of the strata corporation or a member of the section executive;
- Another related real estate professional of the brokerage;
- A director or officer of the brokerage;
- A person employed or engaged by the brokerage who is authorized to practice as:
- A lawyer under the Legal Profession Act,
- A certified general accountant under the Accountants (Certified General) Act,
- A chartered accountant under the Accountants (Chartered) Act, or
- A certified management accountant under the Accountants (Management) Act.
Your brokerage must also ensure that they arrange for the savings institution to provide a monthly statement relating to each strata corporation’s trust account. The brokerage must then provide the strata corporation with a copy of the statement and a copy of the monthly reconciliation referred to in the Real Estate Services Rules no later than six weeks after the end of the month for which the statement was created.
If you are making investments on behalf of the strata corporation, you are subject to the same rules the strata corporation is bound by under the SPA. It is important you understand and follow the restrictions provided in SPA.
Once your strata management agreement terminates, your brokerage must promptly transfer control of the strata corporation’s funds to the strata corporation or another brokerage of the strata corporation’s choosing within two weeks following the date of the request or four weeks following the date of the termination. Your brokerage is permitted to retain enough funds to pay any outstanding or anticipated invoices incurred on behalf of the strata corporation prior to the agency relationship ending.
If a strata corporation you are managing is comprised of sections, then any blended payments received must be deposited into a trust account maintained for that section. Your brokerage has seven days from receipt of the funds to ensure that the blended payments are deposited into their appropriate trust accounts per the Real Estate Services Rules.