Deposits in Trust
In the practice of his profession, the notary is very often called upon to temporarily hold sums of money intended for a third person in trust. This is particularly true in the case of sums of money derived from the sale of a property, a mortgage or the settlement of an estate.
WHY MUST THE NOTARY HOLD YOUR MONEY?
Notaries do not hold these sums of money in their trust account simply on a whim. Before the funds can be remitted, a number of checks and final verifications need to be made. The case of the sale of a property illustrates this fact perfectly well.
When you sign the deed of sale of your property, you do not receive your money the same day. Before disbursing the funds, the notary must deposit all the necessary documents concerning the deed of sale in the registry office of the registration division concerned in order to allow the agents to make the entries required in the registers. This usually takes a few days.
The notary will remit the proceeds of the sale to you after verifying that the name of your buyer appears as owner in the registers of the publication of the rights and after having ascertained, in accordance with your obligations described in the deed of sale, that no new undeclared charge was recorded against the building.
For everyone’s protection, the Notarial Professional Liability Insurance Fund imposes this deduction as a compulsory procedure; it is even a condition of application for the notary’s insurance policy.
WHERE IS THIS MONEY DEPOSITED?
Notaries must immediately deposit the sums entrusted to them by or for their clients in a special trust account opened in a bank, a credit union or a trust company. In all cases, the deposit institution must be a member of the Régie de l’assurance-dépôts du Québec.
The Chamber of Notaries also exercises very strict control over the administration and audit of the trust accounts of each notary. In addition, if a notary ceases to practice, the Chamber immediately appoints another notary to act in his place so that there is no delay for the client.
Sometimes a deposit may spend a long time in the notary’s trust account before being ultimately handed over to its recipient. This is the case in the majority of estate settlement cases. In this event, the notary may suggest opening an exclusive special trust account that will generate interest. If you ask the notary to open a special trust account, an administration fee and costs for the procedure will be charged.
However, money given to notaries to be deposited in their trust account is generally entrusted to them for a short period of time and does not justify the opening of a special account. Costs and administration fees related to the opening of a special trust account are often higher than the interest generated by the deposit of the money entrusted to the notary.
Notaries will therefore keep the vast majority of the sums entrusted to them by their clients in a general trust account. Each client has a personalized record concerning the sums of money deposited and withdrawn in this trust account and may demand a copy of a statement of transactions. In addition, the law stipulates that the interest generated by this general account must be paid to the Notarial Studies Fund of the Chambre des notaires.
WHAT IS THE NOTARIAL STUDIES FUND?
Established in 1973 under the Notaries Act, the Notarial Studies Fund consists largely of interest earned on notary trust accounts. The Notarial Studies Fund is also made up of the gifts and legacies paid into it.
The Chambre des notaires du Québec manages the Notarial Studies Fund within the framework provided by the law. The Notarial Studies Fund, through the Chambre des notaires, therefore annually subsidizes several activities and projects that are compatible with its objectives.
WHAT IS THE NOTARIAL STUDIES FUND USED FOR?
In recent years, the Notarial Studies Fund has funded numerous research projects and numerous activities sponsored by several organizations in the areas of law and justice.
In addition, much of the money from the Notarial Studies Fund is also devoted to the training and development of notaries.
The Notarial Studies Fund has contributed to the creation and maintenance of a comprehensive legal documentation centre and the development of high-performance computer software designed to meet the specific needs of notaries.
Thanks to the Fund, a graduate scholarship program was set up to encourage the emergence of specialists in the notary profession in Quebec.
Together with the many training courses and publications funded in part by the Notarial Studies Fund, it is clear that the Fund contributes greatly to keeping notaries up to date on professional knowledge. The public is thus assured of high quality services in line with the most recent developments.
Notaries who receive money in banknotes of a value in excess of $10,000 for deposit in their trust account are subject to the same legal restrictions and declarations as financial institutions with respect to the source and the use of these sums. These measures are in place to combat money laundering.
For more information on the Notarial Studies Fund or the Fund granting policy, please contact the Chambre des notaires du Québec Secretariat.
Source : Chambre des notaires du Québec (Translation)
Consult your notary, who leaves nothing to chance.