Security Deposits Trust Accounts

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So I thought I was doing this the right way, but now I'm not sure.

44(1) A landlord shall
(a) deposit each security deposit consisting of money received
by the landlord into an interest-bearing trust account at a
bank, treasury branch, credit union or trust corporation in
Alberta within 2 banking days after receiving the deposit,
and
(b) ensure that the security deposit remains in trust until it is
disposed of in accordance with this Act and the regulations.
(2) A landlord is the trustee of the money in a trust account on
behalf of the tenant who paid it or, if the tenant has assigned the
residential tenancy agreement with the consent of the landlord
under section 22, the assignee.

That's what the act says, but I'm not sure exactly what kind of account it is supposed to be. Just a regular interest savings account that the name on the account is "My Rental Co, In Trust"? Or is there something special that needs to be done, like a specific trust agreement, or a special kind of account?

And someone is telling me I need a separate account for each tenant, but that doesn't seem reasonable, I mean what about properties with hundreds of units, or companies with thousands of tenants, each one needs an account?

My bank seems stumped (or at least they're "looking into it").

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To answer my own question, I called Service Alberta, and he said that an account that was named "Real Estate Co, In Trust" was sufficient, but ask the bank about an account a lawyer would use to hold money they'd got from a client, it can be the same kind of account.

And there's no requirement to have one per property.

So crisis averted lol. Bank still is confused though, that's worth something.

[Smartcar]

It can be a regular interest-bearing savings account (just make sure it gives interest at least 1-yr GIC rate less 3%), and you can use one account for all your tenants.

Trust Account

All security deposits collected since August 1, 1992 must be deposited in an interest-bearing trust account. The security deposit must be deposited into the trust account within 2 banking days after the tenant makes the payment to the landlord. Security deposits received before August 1, 1992 can be deposited in the trust account, but it is not required by the RTA. The trust account has to be at a bank, treasury branch, credit union or trust corporation and must contain only security deposit money.
The landlord is the trustee for the tenant's security deposit money and the trust account name must include the words "in trust". The name on the account may refer to the landlord name, the building name or the tenant name, etc. An example is "ABC Rental Company, in trust".

http://www.servicealberta.gov.ab.ca/1142.cfm

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Originally Posted by Smartcar

It can be a regular interest-bearing savings account (just make sure it gives interest at least 1-yr GIC rate less 3%), and you can use one account for all your tenants.


http://www.servicealberta.gov.ab.ca/1142.cfm

Thanks! Yeah the whole time I was reading what you quoted I'm thinking "you keep saying trust account, but you haven't defined trust account".

[Smartcar]

Basically the definition of a trust account is an account where you put money that is not your own, you are holding it "in trust" for someone else.

So it can be any account, but it can only have security deposits in it, you can't also use that account for day to day operations. In the old days you didn't have to have a separate bank account, you just had to keep track of it. You want an interest bearing account so you won't be out of pocket when you have to pay it back (although these days it's not an issue, the 1-year cashable GIC rate is only 1% so you don't have to give any interest on security deposits).

[photon]

Awesome, makes sense.

[Titan]

I would suggest that the term trust account is as much for your benefit as the bank's. It denotes the trust relationship between you and the trustees. You have a fiduciary duty as a trustee to ensure the money is used only for its intended purpose and as smartcar says that is why it is in an isolated account. When you have many beneficiaries, all with the same duty owed, you can use the same account. I assume you came up against a dumb teller as opposed to the bank not knowing what it meant. The lawyer trust account is good advice. It is basically the same account you are looking for.