What is a lawyer's trust account and why do I send closing money there in New Brunswick?
This answer covers the law of New Brunswick.
A lawyer's trust account is a separate bank account that holds money for clients rather than the lawyer's own money, and buyers are often asked to send closing funds there because the lawyer usually handles the closing. Electronic registration of deeds and mortgages can generally be submitted only by subscribers, who are Law Society of New Brunswick members authorized to practise law and who have an agreement with Service New Brunswick, with limited exceptions.
Agents have trust rules for deposits. An agent who receives a deposit must hold it as trustee for all parties according to their rights under the offer or contract, not as agent for one party. No money may be drawn from an agent's trust account except in accordance with the terms on which it was received.
When your lawyer releases closing funds depends on your agreement of purchase and sale and the closing arrangements, so ask your lawyer to explain the timing. To avoid wire fraud, never rely on payment instructions that arrive only by email; phone the office using a number you already trust and confirm the account details before sending money.
Key takeaways
- When a real estate agent receives a deposit, the agent must hold it as trustee for all parties according to their rights under the offer or contract, not as agent for one party, unless the offer or contract says otherwise and every other party acknowledges it in writing.
- An agent who holds a deposit must hold it as trustee for all parties, and money cannot be drawn from the trust account except according to the terms on which it was received.
- When your lawyer releases closing funds depends on your agreement of purchase and sale and the closing arrangements, so ask for the timing in advance.
- Never rely on payment instructions that arrive only by email; phone the office on a number you already trust and confirm the account details before sending money.