Real estate brokerages
Prior to the formation of the Real Estate Foundation in 1985, all interest generated on brokers' trust accounts went to the financial institutions. All service charges paid on these trust accounts were borne by the brokers. Because of the brokers' position as trustee of these monies, they were prohibited from earning any interest on their trust accounts. In essence, this was lost money.
Since 1985, the Real Estate Foundation has received the interest that accrues on brokerage trust accounts. It has also paid some of the service charges.
- Pursuant to Section 26(1) of the Real Estate Services Act, a brokerage must maintain, in accordance with the rules, one or more interest bearing trust accounts with one or more savings institutions in British Columbia.
- Pursuant to Section 29(1), A brokerage that is credited by a savings institution with interest on money held in a brokerage trust account (a) holds the interest in trust for the foundation, and (b) must cause the savings institution to pay the interest to the foundation in accordance with the regulations.
The Real Estate Services Act is the legislation that governs real estate brokerages, the Real Estate Foundation, and more. Along with the Real Estate Development Marketing Act, RESA replaced the Real Estate Act January 1, 2005.
Download form here. Complete and email to askme (at) refbc.com or fax to 604.688.3669.
This one-page form is to be completed and submitted by new real estate brokerages or when an existing brokerage changes financial institutions or opens a new pooled trust account. The form authorizes your financial institution to pay interest to the Foundation, according to the current compensation agreement (see below). Credit union members, you have a special form which is available through your branch.
The Foundation has compensation agreements in place with the majority of financial institutions in British Columbia concerning the calculation and payment of interest on these accounts. To the extent that interest has accrued during the quarter, reasonable account transaction fees will be deducted before payment is made to the Foundation. The Foundation is not responsible for bank charges where the transaction fees exceed the interest accrued or for other fees such as certified cheques, statement preparation, or audit confirmation.
NOTE TO PROPERTY MANAGERS HANDLING SECURITY AND PET DEPOSITS
Security and Pet Deposits held under the Residential Tenancy Act, where the broker is required to pay accrued interest to individuals on a pro-rata basis, are not subject to Section 29 of the Real Estate Services Act.
To keep these funds from being subject to Section 29, a brokerage must maintain a separate pooled trust account for security and pet deposits only. When security and pet deposits are deposited into the broker’s general pooled trust account (an account containing any other type of deposit outside of security and pet deposits), those monies then become subject to the requirement to remit interest to the Real Estate Foundation of BC. We strongly advise brokerages holding money for security and pet deposits to ensure these funds are not held in the brokers general pooled trust account.
For further information on trust accounts please refer to the Brokerage Standards Manual or directly to the Real Estate Services Act.
NOTE TO STRATA MANAGERS MAINTAINING FLOW-THROUGH ACCOUNTS
A pooled trust account may be used by a brokerage for either electronic deposits and/or payments. Although the Council Rules require that the brokerage maintain separate trust accounts for each strata corporation, pooled trust accounts are permitted for the electronic collection of strata fees and payment of invoices on behalf of strata corporations. These pooled trust accounts are referred to as “flow- through” accounts. Pooled trust accounts being used as flow-through accounts are subject to Section 29 of the Real Estate Services Act and a financial institution must be directed to pay any interest on the flow-through account to the Real Estate Foundation of BC.
For further information please refer to the Brokerage Standards Manual or directly to the Real Estate Services Act.