Where Does Your Deposit Go After Your Offer Is Accepted in Alberta?

You have made an offer on a home and put down a deposit. Your offer is accepted, and the money is now with the brokerage. It is fair to ask where it actually sits and who can touch it.

In Alberta, the Real Estate Act and its regulation and Rules set out how a brokerage must handle that money. This article walks through those rules in plain terms. It does not cover who keeps a deposit if a deal falls apart, because that depends on the signed contract and on court decisions.

This article covers the law of Alberta.

Before the brokerage takes your money

Before a licensee receives money, the licensee must sign a service agreement. That agreement must acknowledge the trust arrangement and set out how the money will be received, held and disbursed.

The deposit amount itself is normally set out in the standard contract used for residential purchases, along with the buyer, seller, property details and financing terms. Buyers may also have a lawyer review the agreement before signing.

The deadline and the account

Money received in trust must be deposited within 3 business days of receipt. For money received with an offer to purchase, the 3 business days run from acceptance of the offer.

The deposit must go into an interest-bearing account at a bank, loan corporation, trust corporation, credit union or treasury branch. The account must be in the licensee's name and designated as a trust account. Trust money must be kept on deposit in Alberta. Licensees with business premises in Lloydminster may use a local trust account.

Keeping it separate and releasing it

A licensee must keep trust money separate from the licensee's own money. A brokerage must not use trust money to pay its own general office expenses or commissions owed to its brokers or associates. Payments from trust must be made by cheque or bank transfer with supporting documentation.

Trust money can be paid out only in accordance with the Rules and the terms of the trust. Those terms must be in writing and agreed to by the licensee and all other parties. In practice, one side cannot simply ask for the money and have it released. Release follows the written terms, such as the purchase contract or a written direction.

These protections cannot be signed away. Any waiver or release of the trust-account duties by the person the licensee acts for is void.

Interest, notices, statements and unclaimed money

• Interest: a deposit held in a brokerage's trust account earns interest that is paid to the Alberta Real Estate Foundation, at least quarterly and less service charges. The buyer and seller do not receive it.
• Missed deposits: a brokerage must notify all parties in writing if an expected deposit is not received or a deposit cheque is not honoured. An associate must tell the broker if an expected deposit has not been received.
• Statements: a brokerage must give a client a statement of receipts and disbursements of the client's trust money within a reasonable time after the client asks, unless otherwise agreed.
• Unclaimed money: if a licensee holds trust money for more than 2 years and cannot locate the owner, it must be paid to the Alberta Real Estate Foundation. The Foundation pays it to the rightful owner if entitlement is later established.

Condos, new builds and what to do next

Different rules apply in two situations. For a new condominium unit bought from a developer, the developer must hold your money, other than rents or security deposits, in trust until title is issued. It must deposit the money in an Alberta trust account within three days excluding holidays and Saturdays, and keep it on deposit in Alberta. The developer is entitled to the interest. If the developer has not met the conditions for release, the corporation or an interested party may apply to the Court for an order for payment out.

For a new home bought from a builder, a buyer who paid a deposit to the builder may register a caveat on the land title to protect it.

A claim, such as for breach of a purchase contract or return of a deposit, must be brought within 2 years after you first knew or ought to have known of it, or 10 years after it arose, whichever expires first. Other provisions may also matter, so check your facts with a lawyer.

• Keep your signed service agreement and purchase contract.
• Note the date your offer was accepted and when your deposit was received.
• Ask the brokerage for a statement of receipts and disbursements if you want confirmation.
• Get advice promptly if a deposit looks missing or a dispute starts.

Frequently asked questions