Who holds the deposit in an Alberta real estate deal?
This answer covers the law of Alberta.
If a real estate brokerage receives your deposit, it holds the money in trust rather than passing it to the seller. A licensee must keep trust money separate from their own money and in an interest-bearing trust account at a bank, loan corporation, trust corporation, credit union or treasury branch.
Money received with an offer must be deposited within 3 business days of the offer being accepted. The account must be kept in Alberta, except licensees with business premises in Lloydminster may use a local trust account. The brokerage can pay the money out only under the Rules and the written terms of the trust, which all parties must agree to, so release follows your purchase contract or a written direction. The interest goes to the Alberta Real Estate Foundation, not to you or the seller.
New builds work differently. For a new condominium unit, the developer must hold your money in trust until title is issued. For a new home bought from a builder, you may register a caveat on the land title to protect a deposit you paid. Whether your deposit goes to a brokerage, a lawyer or someone else depends on your contract, so have a lawyer review it before you sign.
Key takeaways
- A brokerage holding your deposit must keep it in an interest-bearing trust account in Alberta (with an exception for licensees with business premises in Lloydminster), separate from its own money.
- Money received with an offer must be deposited within 3 business days of the offer being accepted.
- The brokerage can pay out the deposit only under the written terms of the trust that all parties have agreed to.
- The interest on a deposit in a brokerage trust account is paid to the Alberta Real Estate Foundation, not to the buyer or seller.