Your notary and your money
You are ready to sign the deed of sale of your residence. The bank has already transferred the amount of loan granted to the purchaser to the notary, and you are waiting for just one thing: getting your money so you can give it to your own notary to buy your new home. However, the notary has informed you that he must make certain verifications before transferring the money to you. What kind of verifications? And why are you being made to wait?
Why is the notary required to hold your money?
Notaries do not withhold sums of money in their trust accounts on a whim. In fact, they must check to see whether the funds received from the purchaser and the creditor concerned are sufficient, so that they cover what is owed to the vendor and the creditor, if one is involved. It is also their job to ensure that the time period permitting an irrevocable access to such funds has expired.
To allow for a quicker access to the funds, your notary will first of all require an electronic transfer of funds and, secondly, the bank draft or the certified cheque.
Before remitting the funds to the vendor, notaries must also:
- "Officialize" the title of ownership of the purchaser. The deed of sale must be filed at the land registry office of the registration division concerned. After the deed is filed, the notary must make sure the purchaser is indeed the individual registered as "owner" in that office's registry (which generally takes 24 hours from the time the deed is delivered).
- Verify again, at the land registry office, that there exist no liens (for example, a legal hypothec) that the vendor might not have disclosed. The notary must also obtain an agreement to cancel any existing liens (for example, the vendor's current hypothec).
It is the duty of the notary to carry out these verifications for the goal of ensuring everyone's protection. It is also the notary who holds the money that is intended for the vendor; in normal conditions, the funds are retained only for a few days.
Your money is in safe hands!
Rest assured - part of the role of a notary is to temporarily hold an amount of money from one client that is intended for a third party. Amounts held in these cases are deposited in what is called a "trust account".
The notary's role of intermediary is often played out in cases where it is necessary to hold, in safekeeping, the amount from the sale of a property, a hypothecary loan (mortgage) or the settlement of a succession (estate). Is your money in safe hands? - Absolutely. Tight control is maintained by the Chambre des notaires du Québec over the amounts deposited in trust accounts by notaries through an annual audit performed by a legally competent accountant, in addition to verifying these accounts through its own inspection department. What is more, every account held in trust must be opened at a Canadian financial institution whose funds are covered by deposit insurance.
The accounting of trust accounts
Every client of a notary has a personalized file indicating all the deposits and withdrawals made in a trust account. If clients so desire, they can have a statement of the deposits and withdrawals drawn up for them.
What happens to the interest generated by such an account? It is deposited into the Notarial Studies Fund of the Chambre des notaires du Québec. In recent years, this Fund has provided subsidies to a number of research projects and a variety of activities sponsored by organizations active in the field of law and justice, with an aim to ensuring the public's protection.
In the case of an amount of money likely to be held for some time, the notary can suggest to the person to whom the money is intended to open a so-called "special" trust account wherein the interest in paid into the client's account. However, if you authorize your notary to open such an account, keep in mind that fees and expenses can be charged.
Consult your Notary: Leave nothing to chance