Return of Deposits

When trust funds are deposited into a real estate brokerage’s trust account for an accepted agreement of purchase and sale, they are held in trust for that transaction. The broker of a brokerage is responsible for overseeing the trust account and ensuring the trust funds are held in accordance with the Commission By-law.

The release of trust funds is subject to the Commission By-law and outlined in clause 1 of the Agreement of Purchase and Sale. Clause 1.2 states: “It is agreed by the Buyer and the Seller that the release of the deposit from the brokerage trust account is subject to the applicable NSREC By-laws.”

The applicable by-law is 611 (Transactions That Fail to Complete):

(a) At the time a transaction fails to complete, the broker holding the trust funds must advise the parties to the transaction that the brokerage is obligated to hold the trust funds in the trust account until:

(i) the parties to the transaction agree, in writing, as to how the money is to be disbursed; or
(ii) the brokerage is ordered, by a court of competent jurisdiction, to disburse the trust funds in a specified manner.

(b) At the time the transaction fails to complete, the broker must also advise the parties that if no resolution is made regarding the disbursement of the funds within two years of the date the funds were deposited, the broker must disburse the unclaimed funds to the Commission to be held for an additional four years, after which, if the parties have not agreed to how the funds will be disbursed, the funds become the property of the Commission to be used in accordance with the Act.

(c) After the unclaimed funds have been held in the brokerage trust account for two years from the deposit date, the broker must notify the parties that the funds are being disbursed to the Commission and any application by either party to request the funds must be made to the Commission.

To summarize, regardless of whether the funds are being disputed, trust funds can only be released from a brokerage’s trust account with written mutual release from both parties or their respective lawyers. If the deposit is being disputed and one party or their lawyer will not provide written consent, the other party can apply to court of proper jurisdiction for release of funds where a judge or adjudicator can decide to whom funds will be released to. If an adjudicator decides to release the funds to one party, their decision will then allow the broker holding the funds to release the funds to the claiming party. If there is no written mutual release or court order, the broker is unable to return the funds.

The methods by which the deposit can be disbursed are documented in the Commission's Brokerage Transaction and Trust Account Policy.