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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

Land Banking

Gentrification is the process by which a traditionally lower-income neighbourhood undergoes revitalization and attracts higher-income residents,. more

Land Assembly

Land assembly is the process of acquiring and consolidating multiple adjacent parcels of land under one ownership, typically for redevelopment or. more

Joint Venture

A joint venture in real estate is a partnership between two or more parties to develop, own, or operate a property or project, sharing risks, costs,. more

Infill Development

Infill development is the process of building new housing, commercial buildings, or amenities on vacant or underutilized land within existing urban areas.. more

Inclusionary Zoning

Inclusionary zoning is a municipal planning tool that requires or incentivizes developers to include a percentage of affordable housing units in new. more

Impact Fees

Impact fees are charges levied by municipalities on new developments to offset the cost of additional public infrastructure and services required by. more

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