Under BC law, deposits received pursuant to a Contract of Purchase and Sale must be held by:

Q: What is the correct answer to: Under BC law, deposits received pursuant to a Contract of Purchase and Sale must be held by:

The correct answer is A brokerage trust account, a lawyer's trust account, or a notary's trust account. Option B is correct because under RESA and its regulations, deposits received pursuant to a Contract of Purchase and Sale must be placed in a trust account — specifically a brokerage's trust account, a lawyer's trust account, or a notary public's trust account. These trust accounts are regulated and audited to ensure the safety of client funds until the transaction completes or the contract collapses.

Q: What background knowledge is needed for this Contracts & Agreements question?

Trust account management is one of the most heavily regulated aspects of real estate practice in BC. RESA requires that all deposits be placed in a designated trust account within a strict timeframe. Brokerages must maintain trust accounts at authorized financial institutions, keep detailed records, and undergo regular trust account audits. Lawyers and notaries public also maintain trust accounts governed by their respective professional bodies. The trust account requirement protects consumers by ensuring their funds are held safely and separately from the brokerage's operating funds.

Q: What is a good way to remember the answer to this Contracts & Agreements question?

Deposits go into trust accounts held by one of three parties: Brokerage, Lawyer, or Notary. Remember BLN — these are the only acceptable trust account holders. Never a personal account, never the seller directly. When the exam asks where deposits must be held, look for the answer listing brokerage trust, lawyer trust, or notary trust accounts. Any other option is incorrect.

Q: What exam tip applies to this Contracts & Agreements question?

The word 'trust' is critical. Deposits must be in a trust account, not a regular bank account. If an answer does not mention a trust account held by a brokerage, lawyer, or notary, it is wrong.

Q: How does this Contracts & Agreements concept apply in real world practice?

A buyer submits a $30,000 deposit with their offer on a home in Vancouver. The buyer's agent delivers the deposit cheque to the brokerage, which deposits it into the brokerage's trust account within 24 hours as required by RESA. The funds remain in trust until the transaction completes (at which point they are applied to the purchase price) or the contract collapses (at which point they are returned to the buyer).

Question

Contracts & AgreementsBCMEDIUM

Under BC law, deposits received pursuant to a Contract of Purchase and Sale must be held by:

Answer Options

A

The seller's personal bank account

B

A brokerage trust account, a lawyer's trust account, or a notary's trust account

C

The buyer's mortgage lender

D

The BC Financial Services Authority