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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

Budgeting

Budgeting in real estate refers to the process of forecasting and managing income and expenses associated with owning, operating, or developing a property.. more

Tenant Improvements

Tenant improvements refer to custom modifications or build-outs made to a leased space to suit the tenant’s operational needs, often negotiated as. more

Highest and Best Use

Highest and best use refers to the reasonably probable use of a property that results in the highest value, provided it is legally permissible,. more

Gross Lease

A gross lease is a commercial lease where the tenant pays a fixed rent, and the landlord covers most or all operating expenses such as property. more

Brownfield

A brownfield is a property that was previously used for industrial or commercial purposes and is now vacant or underused, often requiring. more

Record of Site Condition (RSC)

A Record of Site Condition (RSC) is a formal document filed with a provincial environmental authority certifying that a property meets required. more

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