Trust Account

Learn how trust accounts work in Canadian real estate, who manages them, and how they protect buyers and sellers during transactions.

Trust Account

May 22, 2025


What is a Trust Account?

A trust account is a special type of bank account used by real estate professionals, lawyers, or developers to hold client funds separately from their own operating funds.

Why Do Trust Accounts Matter in Real Estate

In Canadian real estate, trust accounts are a critical component of financial and legal protection. When a buyer submits a deposit during a property transaction, that money is held in a trust account until closing.


Trust accounts are used for:
  • Buyer deposits or down payments
  • Rent collection by property managers
  • Construction draws or developer funds


Real estate brokerages and law firms are regulated and audited to ensure trust accounts are properly maintained. Misuse or commingling of funds can result in disciplinary action, fines, or loss of license.


Trust accounts provide transparency and security, ensuring that funds are available and accounted for during the transaction. Buyers and sellers should always confirm that deposits are being held in a verified trust account.


Understanding trust accounts builds confidence in the real estate process and protects clients from financial risk.

Example of a Trust Account

A buyer’s $50,000 deposit is held in the listing brokerage’s trust account and only released upon successful closing of the home sale.

Key Takeaways

  • Holds client funds securely during transactions.
  • Used for deposits, rents, and development funds.
  • Maintained by lawyers or brokerages.
  • Separates client money from business funds.
  • Ensures trust, compliance, and accountability.

Related Terms

  • Deposit
  • Real Estate Lawyer
  • Brokerage Account
  • Closing Process
  • Financial Regulation

Additional Terms

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A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

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Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

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