Can I Get My Deposit Back From a Realtor Trust Account in BC?

Your purchase has fallen through, and your deposit is sitting with a brokerage. You want to know whether you can simply ask for it back, and what happens if the seller says it is theirs.

This article explains how BC law requires a brokerage to hold deposit money, what the brokerage's role is in a dispute, and where to turn if something goes wrong. Whether you are actually entitled to the deposit depends on your contract and the facts, so a lawyer should review those.

This article covers the law of British Columbia.

Where your deposit must go

A brokerage must pay all money it receives from or for a principal in relation to real estate services promptly into a BC interest-bearing trust account. Brokerages and their licensees are regulated by BCFSA, the BC Financial Services Authority.

There is a narrow exception. A licensee providing trading services is exempt from the pay-into-trust requirement only if all principals agree in a written agreement that is separate from the trade agreement, and any rule conditions are met.

The brokerage is a stakeholder, not your agent

Deposit money held for a trade is held by the brokerage as a stakeholder and not as agent for one of the parties. In plain words, the brokerage is not on your side or the seller's side when it comes to that money.

That rule applies unless the parties agree otherwise in writing or regulated circumstances apply. It also does not cover certain items, such as periodic rents and tenant security deposits.

This is why a brokerage often will not hand the money to one party just because that party asks. The contract and the facts decide who is entitled to it, and that is a legal question a lawyer can help you assess.

What happens when buyer and seller disagree

Where there are adverse claimants to trust money, a brokerage may apply to the Supreme Court to pay the trust money into court. That is one option the law gives the brokerage, and how a particular dispute is resolved depends on the contract and the circumstances.

Trust money that is not held as a stakeholder may be withdrawn only for listed purposes, including court-ordered payments and payments directed by the principal.

If you think your money was mishandled

Any person may make a complaint to the superintendent if they believe a licensee may have committed professional misconduct or conduct unbecoming. The complaint must be in writing and include particulars. Unless it is anonymous, the superintendent must acknowledge it and tell you the outcome.

A complaint is a regulatory step, not a lawsuit. The discipline process provides no damages for the complainant. Compensation is available only through the Special Compensation Fund, and only for compensable loss, meaning money held by a licensee that was misappropriated, wrongfully converted or fraudulently obtained.

• A Special Compensation Fund claim must be made in writing to the superintendent within 2 years after the earliest of the events listed in the Act.
• The Fund is capped at $200 000 to a single claimant and $1 000 000 in total for claims related to a single brokerage.

What to do next

• Find your purchase contract and read the clauses about the deposit and about what happens if the sale does not complete.
• Collect your emails, texts and any written notices about the deposit.
• Ask the brokerage in writing where the deposit is held and what it needs from you.
• Do not assume the money is yours or the seller's until the facts are reviewed against the contract.
• Speak with a lawyer before signing any release, because a release can affect your rights.

Brokerages must keep records, including trade record sheets showing every disbursement of deposit money, for at least 7 years unless the superintendent authorizes a shorter period.

Frequently asked questions