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Trading Services Examples
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This case will show how ABC Realty Ltd. records all its trust transactions and maintains its trust accounting books and records in accordance with general trust accounting principles and RESA. Please note that this case is for a manual accounting system. Brokerages with computerized accounting systems will have most of the following exhibits automated.
Exhibit IPermanent link to this section
Trust Funds Received and DisbursedPermanent link to this section
ReceivedPermanent link to this section
| Date # | Seller/Buyer | Date Funds Received | Date Funds Deposited to Bank | Pre-numbered Receipt # | Amount |
|---|---|---|---|---|---|
| 1 | A/B | January 17, 2021 | January 18, 2021 | 1 | $1,500.00 |
| 2 | C/D | January 19, 2021 | January 20, 2021 | 2 | $1,000.00 |
| 3 | E/F | January 24, 2021 | January 24, 2021 | 3 | $5,000.00 |
| 4 | G/H | January 28, 2021 | January 31, 2021 | 4 | $10,000.00 |
| 5 | I/J | January 30, 2021 | January 31, 2021 | 5 | $5,000.00 |
| 6 | K/L | January 31, 2021 | February 1, 2021 | 6 | $20,000.00 |
| 1 | A/B | January 17, 2021 | January 18, 2021 | 7 | $500.00 |
In accordance with section 27 of RESA, ABC Realty Ltd. has ensured that all trust funds received were deposited promptly into a pooled trust account. Please note the date trust funds were received and the date trust funds were deposited to the bank. A brokerage is required to deposit trust funds “promptly” upon receipt.
To assist their accountant in preparing the annual Accountant’s Report, ABC Realty Ltd. has recorded references such as the deal number and/or the seller/buyer on the bank deposit slip.
If the parties have agreed, in the Contract of Purchase and Sale, that the deposit is to be placed into an interest bearing term deposit on a specific date, the funds must initially be deposited into the pooled trust account and then placed in an interest bearing term deposit. Upon redemption of the term deposit, funds must be redeposited to the pooled trust account before being disbursed.
As there are no provisions in RESA which permit a brokerage to maintain non-trust funds in a trust account, ABC Realty Ltd. has ensured that it did not deposit non-trust funds or maintain a cash float in the brokerage trust account.
DisbursedPermanent link to this section
| Deal # Reference | Date Funds Disbursed | Cheque #2 | Date Cleared Bank | Amount |
|---|---|---|---|---|
| 1 | January 26, 2021 | 1 | January 28, 2021 | $2,000.00 |
| 2 | January 28, 2021 | 2 | February 2, 2021 | $1,000.00 |
| 3 | January 31, 2021 | 3 | February 3, 2021 | $5,000.00 |
In accordance with the “stakeholder” obligations of RESA, ABC Realty Ltd. has ensured that all trust disbursements were only made once the brokerage has been authorized to disburse the trust monies (i.e. lawyer/notary title registration confirmation, trust release signed by parties of original collapsed contract).
Exhibit IIPermanent link to this section
Trust JournalPermanent link to this section
The trust journal records all receipts and all disbursements with reference to the deal number, a description of the party involved or the transaction, the receipt or cheque number, the amount of the receipt or disbursement and a running balance of the pooled trust account.
| Description | Deal No. | Date | Amount Received | Receipt (Pre-numbered) | Amount Disbursed | Cheque No. | Trust Balance |
|---|---|---|---|---|---|---|---|
| Balance Forward | NIL | ||||||
| Received from Buyer B | # 1 | January 17, 2021 | $2,000.00 | # 1 | – | – | $2,000.00 |
| Received from Buyer D | #2 | January 19, 2021 | $1,000.00 | # 2 | – | – | $3,000.00 |
| Received from Buyer F | # 3 | January 24, 2021 | $5,000.00 | # 3 | – | – | $8,000.00 |
| Disbursed to General Account | # 1 | January 26, 2021 | – | – | $1,500.00 | # 1 | $6,500.00 |
| Disbursed to Commission Trust Account | # 1 | January 26, 2021 | – | – | $500.00 | # 4 | $6,000.00 |
| Disbursed to General Account | # 2 | January 28, 2021 | – | – | $1,000.00 | # 2 | $5,000.00 |
| Received from Buyer H | # 4 | January 28, 2021 | $10,000.00 | # 4 | – | – | $15,000.00 |
| Received from Buyer J | # 5 | January 30, 2021 | $5,000.00 | # 5 | – | – | $20,000.00 |
| Disbursed to General Account | # 3 | January 31, 2021 | – | – | $5,000.00 | # 3 | $15,000.00 |
| Received from Buyer L | # 6 | January 31, 2021 | $20,000.00 | # 6 | – | – | $35,000.00 |
Commission Trust Account JournalPermanent link to this section
| Description | Deal No. | Date | Amount Received | Receipt (Pre-numbered) | Amount Disbursed | Cheque No. | Trust Balance |
|---|---|---|---|---|---|---|---|
| Balance Forward | NIL | ||||||
| Received from Trust-Rep A Smith | #1 | January 26, 2021 | $500.00 | #007 | – | – | $500.00 |
ABC Realty Ltd. has ensured that the trust funds received and disbursed (see Exhibit I) were recorded in the trust journal records on a daily basis.
ABC Realty Ltd. has also ensured that the general accounts are updated on a weekly basis.
To assist their accountant in preparing the annual Accountant’s Report, ABC Realty Ltd. has recorded references, such as the deal number and/or the seller/buyer on the receipt, cheque, or electronic banking documentation.
EXHIBIT IIIPermanent link to this section
Individual Trust LedgersPermanent link to this section
The individual trust ledgers include a separate ledger for each individual deal. Each ledger has a deal reference number and then lists the various transactions that occur with that particular deal. The record for each deal contains all of the receipts and disbursements which take place with this deal.
ABC Realty Ltd. has ensured that the trust funds received and disbursed (see Exhibit I) were recorded in the Individual Trust Ledgers on a daily basis as was done in the trust journal (see Exhibit II).
| Deal # — Seller/Buyer | Description | Date | Receipt | Trust Receipt | Cheque | Trust Disbursed | Balance |
|---|---|---|---|---|---|---|---|
| 1 — A to B | Receipt from Buyer B | January 17, 2021 | 1 | $1,500.00 | – | – | $1,500.00 |
| Receipt from Co-Operating Brokerage | January 25, 2021 | 7 | $500.00 | – | – | $2,000.00 | |
| Payment to general — brokerage commission | January 26, 2021 | – | – | #1 | $1,500.00 | $500.00 | |
| Payment to commission trust account — Rep A. Smith | January 26, 2021 | – | – | #4 | $500.00 | ||
| Deal # — Seller/Buyer | Description | Date | Receipt | Trust Receipt | Cheque | Trust Disbursed | Balance |
| 2 — C to D | Receipt from Buyer D | January 19, 2021 | 2 | $1000.00 | – | – | $1,000.00 |
| Transfer to General | January 31, 2021 | – | – | # 2 | $1,000.00 | ||
| Deal # — Seller/Buyer | Description | Date | Receipt | Trust Receipt | Cheque | Trust Disbursed | Balance |
| 3 — E to F | Receipt from Buyer F | January 24, 2021 | 3 | $5,000.00 | – | – | $5,000.00 |
| Transfer to General | January 28, 2021 | – | – | # 3 | $5,000.00 | ||
| Deal # — Seller/Buyer | Description | Date | Receipt | Trust Receipt | Cheque | Trust Disbursed | Balance |
| 4 — G to H | Receipt from Buyer H | January 28, 2021 | 4 | $10,000.00 | – | – | $10,000.00 |
| Deal # — Seller/Buyer | Description | Date | Receipt | Trust Receipt | Cheque | Trust Disbursed | Balance |
| 5 — I to J | Receipt from Buyer J | January 30, 2021 | 5 | $5,000.00 | – | – | $5,000.00 |
| Deal # — Seller/Buyer | Description | Date | Receipt | Trust Receipt | Cheque | Trust Disbursed | Balance |
| 6 — K to L | Receipt from Buyer L | January 31, 2021 | 6 | $20,000.00 | – | – | $20,000.00 |
At the end of each month, ABC Realty Ltd has ensured that a Trust Liability Reconciliation is made of the remaining balance (if any) on each individual trust ledger (see Exhibit VI).
In order to ensure that all the transactions have been recorded correctly, ABC Realty Ltd. has confirmed that the total of these individual trust ledgers agree to the total in the trust journal.
EXHIBIT IVPermanent link to this section
Trust Bank StatementPermanent link to this section
The following is a sample of a trust bank statement that would be received by the brokerage from the bank each month for each pooled trust account held for the brokerage. Please note that section 30 of RESA prohibits the withdrawal of service charges from a pooled trust account and section 29 requires that interest on a pooled trust account is forwarded to the Real Estate Foundation of BC.
| Bank of British ColumbiaAccount #123456Bank Statement as at January 31, 2021 | ABC Realty Ltd.Trust Account | |||
| Transaction Details | ||||
| Date | Description | Amounts debited from your account ($) | Amounts credited to your account ($) | Balance ($) |
| Business Current Account #123456 | Account Type: POOLED TRUST | |||
| Business Name: | ABC Realty Ltd. | |||
| January 1, 2021 | Opening balance | 0.00 | ||
| Jan 18 | Deposit | $2,000.00 | $2,000.00 | |
| Jan 20 | Deposit | $1,000.00 | $3,000.00 | |
| Jan 24 | Deposit | $5,000.00 | $8,000.00 | |
| Jan 26 | Cheque, No. 001 | $1,500.00 | $6,500.00 | |
| Jan 26 | Cheque, No. 002 | $500.00 | $6,000.00 | |
| Jan 31 | Deposit | $10,000.00 | $16,000.00 | |
| Jan 31 | Deposit | $5,000.00 | $21,000.00 | |
| Jan 31 | Closing Totals | $23,000.00 | $2,000.00 | $21,000.00 |
| Bank of British ColumbiaAccount #123456Bank Statement as at January 31, 2021 | ABC Realty Ltd.Trust Account | |||
| Transaction Details | ||||
| Date | Description | Amounts debited from your account ($) | ||
| Business Current Account #123456 | Account Type: POOLED TRUST | |||
| Business Name: | ABC Realty Ltd. | |||
| January 1, 2021 | Opening balance | 0.00 | ||
| Jan 26 | Receipt 007 | $500.00 | $500.00 | |
| Jan 31 | Closing totals | $500.00 | nil | $500.00 |
ABC Realty Ltd. has reviewed the trust bank statement to ensure that:
- the information displayed is accurate (agrees to all bank deposit slips and cancelled cheques);
- no service charges have been withdrawn from the trust account; and
- the bank has forwarded the interest earned on the trust account to the Real Estate Foundation of BC.
EXHIBIT VPermanent link to this section
Trust Bank Reconciliation as at January 31, 2021Permanent link to this section
ABC Realty Ltd. has ensured that the monthly trust bank reconciliation(s) were prepared no later than five weeks after the monthly accounting cut-off date for the accounts or immediately upon receipt of the trust bank statement(s).
| Balance Per Bank Statement as at January 31, 2021 (This balance is taken from the bank statement on the previous page.) | $21,000.00 | ||
| Add: Outstanding Deposits (Note: Deposits made before the end of the month per the trust journal but which are not shown on the bank statement should be entered here.) | |||
| Receipt # | Date | Amount | |
| 6 | January 31, 2021 | *$20,000.00 | 20,000.00 |
| Subtotal | 41,000.00 | ||
| Less: Outstanding Cheques (Note: Cheques written before the end of the month per the trust journal which have not yet cleared the account should be entered here.) | |||
| Cheque # | Date | Amount | |
| 3 | January 31, 2021 | $5,000.00 | |
| 2 | January 28, 2021 | 1,000.00 | 6,000.00 |
| Adjusted Bank Balance as at January 31, 2021 (This amount should agree with the balance on the trust journal [Exhibit II] and the trust liability reconciliation [Exhibit VI] at the end of the month | $35,000.00 |
*Note: This deposit was placed in a separate interest bearing trust account in the name of the client.
Commission Trust Account
| Balance Per Bank Statement as at January 31, 2021 (This balance is taken from the bank statement on the previous page.) | $500.00 | ||
| Add: Outstanding Deposits (Note: Deposits made before the end of the month per the trust journal but which are not shown on the bank statement should be entered here.) | |||
| Receipt # | Date | Amount | |
| 0 | |||
| Subtotal | 0 | ||
| Less: Outstanding Cheques (Note: Cheques written before the end of the month per the trust journal which have not yet cleared the account should be entered here.) | |||
| Subtotal | 0 | ||
| Adjusted Bank Balance as at January 31, 2021 (This amount should agree with the balance on the trust journal [Exhibit VI] at the end of the month.) | $500.00 |
EXHIBIT VIPermanent link to this section
Trust Liability Reconciliation as at January 31, 2021Permanent link to this section
The trust liability reconciliation is a summary of each individual outstanding client ledger.
ABC Realty Ltd. has ensured that the monthly trust liability reconciliation(s) were prepared no later than five weeks after the monthly accounting cut-off date for the accounts or immediately on receipt of the trust bank statement(s). Section 72(2) of the Real Estate Services Rules requires that the for each trust account of a brokerage, the monthly reconciliations and the monthly trust asset and liability reconciliations must be reviewed, dated, and initialed by a related managing broker or by a person designated by a related managing broker.
ABC Realty Ltd. has also ensured that the total trust funds in the trust liability reconciliation(s) agree to the adjusted bank balance (see Exhibit V).
| Deal # | Trust Fund | Commission Trust Funds | Comment |
|---|---|---|---|
| 1 | $500.00 | Rep-A. Smith | |
| 4 | $10,000.00 | In pooled trust | |
| 5 | $5000.00 | In pooled Trust | |
| 6 | $20,000.00 | Term deposit certificate #7 | |
| Total Trust Funds | $35,000.00 | $500.00 | |
| $35,500.00 |
Rental Property Management ExamplesPermanent link to this section
DEF Rental Property Management Ltd. is a newly licensed rental property management company under RESA.
This case will show how DEF Rental Property Management Ltd. records all its trust transactions and maintains its trust accounting books and records in accordance with general trust accounting principles and RESA.
Please note that this case is for a manual accounting system. The brokerages with computerized accounting systems will have most of the following Exhibits automated.
EXHIBIT VIIPermanent link to this section
Trust Funds Received and DisbursedPermanent link to this section
Case facts:
- three properties are being managed;
- one rental property management pooled trust account is maintained;
- rents are collected at the beginning of the month;
- rental property expenditures are paid during the first 14 days of the month;
- net rental amounts are paid on the 15th of the month to ensure that tenant cheques or electronic deposits have cleared their accounts; and
- the management fee charged is 10% of gross rental receipts – for the purpose of this example, GST is included in the 10% of gross rental receipts.
Trust Funds ReceivedPermanent link to this section
| Rental Property | Description | Date Deposit Received | Date Deposited to Bank | Receipt (pre-numbered) | Amount |
|---|---|---|---|---|---|
| # 1 | Rental receipt | January 1, 2021 | January 2, 2021 | # 1 | $500.00 |
| # 2 | Rental receipt | January 2, 2021 | January 3, 2021 | # 2 | $550.00 |
| # 3 | Rental receipt | January 2, 2021 | January 3, 2021 | # 3 | $600.00 |
In accordance with section 27 of RESA, DEF Rental Property Management Ltd. has ensured that all the trust funds received were deposited promptly into a pooled trust account. Please note the date the trust funds were received and the date the trust funds were deposited to the bank. The brokerage is required to deposit trust funds “promptly” upon receipt.
To assist their accountant in preparing the annual Accountant’s Report, DEF Rental Property Management Ltd. has recorded references, such as the tenant name or rental property address, on the deposit slip and clearly indicated whether the rent payment was paid by cash, cheque, or electronic deposit.
As there are no provisions in RESA which permit a brokerage to maintain non-trust funds in a trust account, DEF Rental Property Management Ltd. has ensured that it did not deposit non-trust funds or maintain a cash float in the trust account.
Trust Funds DisbursedPermanent link to this section
| Rental Property | Description | Date Funds Disbursed | Date Cleared Bank | Cheque # | Amount |
|---|---|---|---|---|---|
| # 1 | Hydro Payment | January 10, 2021 | January 16, 2021 | # 1 | $100.00 |
| # 1 | Management fee | January 15, 2021 | January 20, 2021 | # 2 | $50.00 |
| # 1 | Net rent paid to owner | January 15, 2021 | January 17, 2021 | # 3 | $350.00 |
| # 2 | Repair | January 14, 2021 | February 2, 2021 | # 4 | $250.00 |
| # 2 | Management fee | January 15, 2021 | January 20, 2021 | # 5 | $55.00 |
| # 2 | Net rent paid to owner | January 15, 2021 | January 16, 2021 | # 6 | $245.00 |
| # 3 | Managemt fee | January 15, 2021 | January 18, 2021 | # 7 | $60.00 |
| # 3 | Net rent paid to owner | January 15, 2021 | February 2, 2021 | # 8 | $540.00 |
EXHIBIT VIIIPermanent link to this section
Trust JournalPermanent link to this section
The trust journal records all receipts and all disbursements with reference to the rental property number, a description of the transaction, the receipt or cheque number, the amount of the receipt or disbursement and a running balance of the pooled trust account.
| Description | Rental Property | Date | Amount Received | Receipt (Pre-numbered) | Amount of Disb. | Cheque | Trust Balance |
|---|---|---|---|---|---|---|---|
| Balance Forward | $275.00 | ||||||
| Rental Receipt | # 1 | January 1 2021 | $500.00 | # 1 | – | – | $775.00 |
| Rental Receipt | # 2 | January 2, 2021 | $550.00 | # 2 | – | – | $1,325.00 |
| Rental Receipt | # 3 | January 2, 2021 | $600.00 | # 3 | – | – | $1,925.00 |
| Hydro Payment | # 1 | January 10, 2021 | – | – | $100.00 | # 1 | $1,825.00 |
| Repair Bill | # 2 | January 14, 2021 | – | – | $250.00 | # 4 | $1,575.00 |
| Net rent sent to owner | # 1 | January 15, 2021 | – | – | $350.00 | # 3 | $1,225.00 |
| Net rent sent to owner | # 2 | January 15, 2021 | – | – | $245.00 | # 6 | $980.00 |
| Net rent sent to owner | #3 | January 15, 2021 | – | – | $540.00 | # 8 | $440.00 |
| Management Fee Charged | # 1 | January 15, 2021 | – | – | $50.00 | # 2 | $390.00 |
| Management Fee Charged | # 2 | January 15, 2021 | – | – | $55.00 | # 5 | $335.00 |
| Management Fee Charged | # 3 | January 15, 2021 | – | – | $60.00 | # 7 | $275.00 |
DEF Rental Property Management Ltd. has ensured that trust funds received and disbursed (see Exhibit VII) were recorded in the trust journal for appropriate and timely accounting.
DEF Rental Property Management Ltd. has also ensured that the general accounts were updated for appropriate and timely accounting.
To assist their accountant in preparing the annual Accountant’s Report, DEF Rental Property Management Ltd. has recorded references on the cheque and the receipt, such as the rental property address and/or name and invoice # for supplier.
EXHIBIT IXPermanent link to this section
Individual Trust LedgersPermanent link to this section
The individual trust ledgers include a separate ledger for each individual rental property management client which lists the various transactions that occur with that particular client. The record for each rental property management client contains all of the receipts and disbursements which take place with this client.
DEF Rental Property Management Ltd. has ensured that trust funds received and disbursed (see Exhibit VII) were recorded in the Individual Trust Ledgers on a daily basis, as was done on the Trust Journal (see Exhibit VIII).
DEF Rental Property Management Ltd. has also ensured that individual client ledgers were reproduced monthly and distributed to rental property owners as “monthly financial statements” which show the flow of client trust receipts and disbursements.
DEF Rental Property Management Ltd. has also forwarded a copy of the expenditure invoice(s) to rental property owners to support all disbursements.
| Description | Date | Receipt | Trust Receipt | Cheque | Trust Disbursement | Balance |
|---|---|---|---|---|---|---|
| Rental Property # 1 | Carry forward | $100.00 | ||||
| Rental receipt | January 1, 2021 | # 1 | $500.00 | – | – | $600.00 |
| Hydro payment | January 10, 2021 | – | – | # 1 | $100.00 | $500.00 |
| Management fee | January 15, 2021 | – | – | # 2 | $50.00 | $450.00 |
| Net rent paid to owner | January 15, 2021 | – | – | # 3 | $350.00 | $100.00 |
| Description | Date | Receipt | Trust Receipt | Cheque | Trust Disbursement | Balance |
|---|---|---|---|---|---|---|
| Rental Property # 2 | Carry forward | $75.00 | ||||
| Rental receipt | January 2, 2021 | # 2 | $550.00 | – | – | $625.00 |
| Repair payment | January 15, 2021 | – | – | # 4 | $250.00 | $375.00 |
| Management fee | January 15, 2021 | – | – | # 5 | $55.00 | $320.00 |
| Net rent paid to owner | January 15, 2021 | – | – | # 6 | $245.00 | $75.00 |
| Description | Date | Receipt | Trust Receipt | Cheque | Trust Disbursement | Balance |
|---|---|---|---|---|---|---|
| Rental Property # 1 | Carry forward | $100.00 | ||||
| Rental receipt | January 2, 2021 | # 3 | $600.00 | – | – | $700.00 |
| Management fee | January 15, 2021 | – | – | # 7 | $60.00 | $640.00 |
| Net rent paid to owner | January 15, 2021 | – | – | # 8 | $540.00 | $100.00 |
At the end of each month, DEF Rental Property Management Ltd. has ensured that a Trust Liability Reconciliation (see Exhibit XII) is made of the remaining balance (if any) on each individual trust ledger. In order to ensure that all the transactions have been recorded correctly, DEF Rental Property Management Ltd. has confirmed that the total of these individual trust ledgers agrees with the total in the Trust Journal.
EXHIBIT XPermanent link to this section
Rental Property Management Bank StatementPermanent link to this section
This is a sample of a trust bank statement that would be received by the brokerage from the bank each month for each pooled trust account held for the brokerage.
Please note that section 30 of RESA prohibits the withdrawal of service charges from a pooled trust account and section 29 requires that interest on a pooled trust account is forwarded to the Real Estate Foundation of BC.
If, however, the agent maintains a specific trust account for security deposits in order to ensure that the interest earned will be paid to the tenant, this account would not be subject to the requirements of section 29(2).
| Bank of British Columbia Account # 45678 Bank Statement as at January 31, 2021 | DEF Rental Property Management Ltd.Trust Account (Rental Property Management) |
| Transaction Details | ||||
| Date | Description | Amounts debited from your account ($) | Accounts credited to your account ($) | Balance ($) |
| Business Current Account #45678 | Account type: POOLED RENTAL TRUST | |||
| Business name: | DEF Rental Property Management Ltd. | |||
| January 1, 2021 | Opening Balance | $275.00 | ||
| Jan 2 | Deposit | $500.00 | $775.00 | |
| Jan 3 | Deposit | $550.00 | $1,325.00 | |
| Jan 3 | Deposit | $600.00 | $1,925.00 | |
| Jan 16 | Cheque, NO. 001 | $100.00 | $1,825.00 | |
| Jan 16 | Cheque, NO. 006 | $245.00 | $1,580.00 | |
| Jan 17 | Cheque, NO. 003 | $350.00 | $1,230.00 | |
| Jan 18 | Cheque, NO. 007 | $60.00 | $1,170.00 | |
| Jan 20 | Cheque, NO. 002 | $50.00 | $1,120.00 | |
| Jan 20 | Cheque, NO. 005 | $55.00 | $1,065.00 | |
| Jan 31 | Closing totals | $1,650.00 | $860.00 | $1,065.00 |
DEF Rental Property Management Ltd. has reviewed the rental property management trust bank statement to ensure that:
- the information displayed is accurate (agrees to all bank deposit slips and cancelled cheques);
- no service charges have been withdrawn from the trust account; and
- the bank has forwarded the interest earned on the trust account to the Real Estate Foundation of BC.
EXHIBIT XIPermanent link to this section
RENTAL PROPERTY MANAGEMENT
TRUST BANK RECONCILIATION
DEF Rental Property Management Ltd. has ensured that the monthly trust bank reconciliation(s) were prepared no later than five weeks after the monthly accounting cut-off date for the accounts or immediately on receipt of the trust bank statement(s). Section 72(2) of the Real Estate Services Rules requires that for each trust account of a brokerage, the monthly reconciliations and the monthly trust asset and liability reconciliations must be reviewed, dated, and initialed by a related managing broker or by a person designated by a related managing broker.
| Balance Per Bank Statement as at January 31, 2021(This balance is taken from the bank statement shown above.) | $1,065.00 | ||
| Add: Outstanding Deposits(Note: Deposits made before the end of the month per the Trust Journal but which are not yet shown on the bank statement should be entered here.) | 0 | ||
| Subtotal | $1,065.00 | ||
| Less: Outstanding Cheques(Note: Cheques written before the end of the month per the Trust Journal but which have not yet cleared the account should be entered here.) | 0 | ||
| Cheque # | Date | Amount | |
| 4 | January 14, 2021 | $250.00 | |
| 8 | January 15, 2021 | $540.00 | $790.00 |
| Adjusted Balance Per Bank as at January 31, 2021 (This amount should agree with the balance on the trust journal [Exhibit VIII] and the trust liability reconciliation [Exhibit XII] at the end of the month) | $275.00 |
EXHIBIT XIIPermanent link to this section
RENTAL PROPERTY MANAGEMENTPermanent link to this section
TRUST LIABILITY RECONCILIATIONPermanent link to this section
The trust liability reconciliation is a summary of each individual outstanding client ledger (per Exhibit IX).
DEF Rental Property Management Ltd. has ensured that the monthly trust liability reconciliation(s) were prepared no later than five weeks after the monthly accounting cut-off date for the accounts or immediately on receipt of the trust bank statement(s).
DEF Rental Property Management Ltd. has also ensured that the total trust funds in the trust liability reconciliation(s) agree to the adjusted bank balance (see Exhibit XI).
| Rental Property # | Trust Funds |
|---|---|
| 1 | $100.00 |
| 2 | $75.00 |
| 3 | $100.00 |
| Total | $275.00 |
Strata Management Examples:
GHI Strata Management Inc. manages three strata corporations. GHI maintains an operating trust account and a contingency reserve trust account for each strata corporation. Strata fees, which include a contribution to the contingency reserve fund, are collected at the beginning of each month.
The strata management fee charged is based upon a monthly fee and established by the approved annual budget for the strata corporation.
Exhibit XIIIPermanent link to this section
Trust Funds Received and DisbursedPermanent link to this section
Trust Funds ReceivedPermanent link to this section
Section 77(2) of Real Estate Services Rules describes requirements where a brokerage holds or receives money on behalf of a strata corporation.
| Strata Corp Operating Account Reference | Strata Unit | Description | Date Deposit Received | Date Deposited to Bank | Receipt (Pre-numbered) | Amount |
|---|---|---|---|---|---|---|
| # LMS1 | 123 | Strata Fee receipt | January 1, 2021 | January 2, 2021 | # 1 | $500.00 |
| # LMS1 | 456 | Strata Fee receipt | January 1, 2021 | January 2, 2021 | # 2 | $550.00 |
In accordance with section 27 of RESA, GHI Strata Management Inc. has ensured that all the trust funds received were deposited promptly into an operating trust account maintained in trust by the brokerage on behalf of the strata corporation. Please note the date the trust funds were received and the date the trust funds were deposited to the bank. The brokerage is required to deposit trust funds “promptly” upon receipt.
To assist their accountant in preparing the annual Accountant’s Report, GHI Strata Management Inc. has recorded references, such as the strata lot number or strata unit address, on the deposit slip and clearly indicated whether the strata fee payment was paid by cash, cheque, or electronic deposit.
As there are no provisions in RESA which permit a brokerage to maintain non-trust funds in a trust account, GHI Strata Management Inc. has ensured that it did not deposit non-trust funds or maintain a cash float in the trust account.
Electronic Deposits
Section 77(3) of the Real Estate Services Rules requires that if a brokerage receives money by way of electronic funds deposit (EFT) into a brokerage trust account that receives funds on behalf of more than one strata corporation, the money must be transferred to the applicable trust account no later than three days after the day on which it was received.
| Strata Coproration EFT Account Reference | Strata Unit | Description | Date Deposit Received | Date Transferred to Strata Operating Account | Receipt Reference | Deposit Amount | Transfer Amount |
|---|---|---|---|---|---|---|---|
| # LMS1 | Jan Strata Fee receipts | January 2, 2021 | EFT1 | $1875.00 | |||
| # LMS1 | 506 | Strata Fee receipt | January 5, 2021 | www74 | $575.00 | ||
| # LMS1 | 1112 | Strata Fee receipt | January 5, 2021 | www849 | $600.00 | ||
| #LMS1 | 5556 | Strata Fee receipt | January 5, 2021 | www613 | $700.00 |
Other Remuneration – i.e.: Forms B & F Fees from a Person other than the Principal
Section 62 of the Real Estate Services Rules identifies some remuneration that is not required to be paid into the brokerage trust account, such as the fees for the completion of Forms B & F where authorized by the service agreements and the remuneration has been earned.
Trust Funds DisbursedPermanent link to this section
| Strata Corporation Account Reference | Description | Date Funds Disbursed | Date Cleared Bank | Cheque # Ref | Amount |
|---|---|---|---|---|---|
| # LMS1 | Hydro Utility payment | January 10, 2021 | January 16, 2021 | # 101 | $100.00 |
| # LMS1 | Strata Management fee | January 15, 2021 | January 20, 2021 | # 102 | $126.00 |
| # LMS1 | Transfer to CRF — Jan | January 31, 2021 | February 3, 2021 | Trf 123 | $50.00 |
Trust Funds Transferred to Contingency Reserve
Section 77(4) of the Real Estate Services Rules requires that for amounts received that include contingency reserve fund money or special levy money or both, it must be paid into an applicable trust account or to the strata corporation. Additionally, section 77(5) of the Real Estate Services Rules requires that, if applicable, within seven days after the end of the month in which the contingency reserve fund or special levy money is received, the brokerage must either pay the money over to the strata corporation or transfer it to an applicable trust account.
| Strata Corporation Account Reference | Description | Date Funds Transferred | Date Cleared Bank | Transfer Reference # | Amount |
|---|---|---|---|---|---|
| # LMS1-CRF | Transfer from Operating — Jan | Jan 31, 2021 | Feb 3, 2021 | Trf 123 | $50.00 |
Trust Funds Transferred to a Pooled Trust Account for Payments on Behalf of More than One Strata Corporation
Section 77(6) of the Real Estate Services Rules requires that if money is transferred to a pooled trust account for one or more strata corporations, the brokerage must promptly pay the money on behalf of the strata corporation.
EXHIBIT XIVPermanent link to this section
Trust JournalPermanent link to this section
The trust journal records all receipts and all disbursements with reference to the strata corporation number, a description of the transaction, the receipt or cheque number, the amount of the receipt or disbursement and a running balance of the designated strata trust account.
LMS1
| Description Operating | Strata Unit | Date | Amount Received | Receipt Reference | Amount of Disbursement | Cheque # | Trust Balance |
|---|---|---|---|---|---|---|---|
| Balance Forward | NIL | ||||||
| Strata Fee Receipt | # 123 | January 1, 2021 | $500.00 | – | – | $500.00 | |
| Strata Fee Receipt | # 456 | January 2, 2021 | $550.00 | – | – | $1,050.00 | |
| Strata Fee Receipt | # 506 | January 5, 2021 | $575.00 | – | – | $1,625.00 | |
| Strata Fee Receipt | # 1112 | January 5, 2021 | $600.00 | – | – | $2,225.00 | |
| Strata Fee Receipt | # 5556 | January 5, 2021 | $700 | – | – | $2,925.00 | |
| Hydro Utility Payment | Jan | January 10, 2021 | – | – | $100.00 | 101 | $2,825.00 |
| Strata Management Fee Charged | Jan | January 15, 2021 | – | – | $126.00 | 102 | $2,699.00 |
| Transfer to CRF | Jan | January 31, 2021 | $50.00 | Trf123 | $2,649.00 |
| Description LMS1-CRF | Strata Unit | Date | Amount Received | Receipt Ref | Amount of Disbursement | Cheque # | Trust Balance |
|---|---|---|---|---|---|---|---|
| Balance Forward | $10,000.00 | ||||||
| Jan Transfer from Operation | $50.00 | Trf 123 | $10,050.00 |
LMS1-CRF
GHI Strata Management Inc. has ensured that trust funds received and disbursed (see Exhibit XIII) were recorded in the trust journal on a daily basis. GHI Strata Management Inc. has also ensured that the general accounts were updated on a weekly basis.
To assist their accountant in preparing the annual Accountant’s Report, GHI Strata Management Inc. has recorded references on the cheque and the receipt, such as the strata corporation and strata unit reference and invoice # for supplier.
EXHIBIT XVPermanent link to this section
Strata Management Bank StatementPermanent link to this section
This is a sample of a trust bank statement that would be received by the brokerage from the bank each month for each trust account held for the brokerage.
| Bank of British Columbia Account # 2468 Bank Statement as at January 31, 2021 | GHI Strata Management Inc. In Trust for LMS1-Operating | |||
| Date | Description | Amounts debited from your account ($) | Amounts credited to your account ($) | Balance ($) |
| Business Current Account #2468 | Account type: OPERATING STRATA TRUST | |||
| Business name: | GHI Strata Management Inc. In Trust for LMS1-Operating | |||
| January 1, 2021 | Opening balance | 0.00 | ||
| Jan 2 | Deposit | $500.00 | $500.00 | |
| Jan 2 | Deposit | $550.00 | $1,050.00 | |
| Jan 5 | www74 | $575.00 | $1,625.00 | |
| Jan 5 | www849 | $600.00 | $2,225.00 | |
| Jan 5 | www613 | 700.00 | $2,925.00 | |
| Jan 16 | Cheque, NO. 101 | $100.00 | $2,825.00 | |
| Jan 20 | Cheque, NO. 102 | $126.00 | $2,699.00 | |
| January 31 | Closing totals | $2,925.00 | $226.00 | $2,699.00 |
| Bank of British Columbia Account # 2468 -1 | GHI Strata Management Inc. In Trust For LMS1-CRF | |||
| Date | Description | Amounts debited from your account ($) | Accounts credited to your account ($) | Balance ($) |
| Business Current Account #2468-1 | Account type; OPERATING STRATA TRUST | |||
| Business Name | GHI Strata Management Inc. In Trust for LMS1-CRF | |||
| January 1, 2021 | Opening balance | $10,000.00 | ||
| January 31 | Closing totals | nil | nil | $10,000.00 |
GHI Strata Management Inc. has reviewed the strata property management trust bank statement to ensure that the information displayed is accurate (agrees to all bank deposit slips and cancelled cheques).
EXHIBIT XVIPermanent link to this section
Strata Property ManagementPermanent link to this section
Trust Bank ReconciliationPermanent link to this section
GHI Strata Management Inc has ensured that the monthly trust bank reconciliation(s) were prepared by the 15th of the following month or immediately upon receipt of the trust bank statement(s).
LMS1-Operating
| Balance Per Bank Statement as at January 31, 2021 (This balance is taken from the bank statement shown above.) | $2,699.00 | ||
| Add: Outstanding Deposits & Transfers (Note: Desposits and transfers instructed before the end of the month per the Trust Journal but which are not yet shown on the bank statement should be entered here.) | 0 | ||
| Subtotal | $2,699.00 | ||
| Less: Outstanding Cheques & Transfers (Note: Cheques and transfers issue before the end of the month per the Trust Journal but which have not yet cleared the account should be entered here.) | |||
| Cheque/Transfer Reference | Date | Amount | |
| Jan CRF | January 31, 2021 | $50.00 | |
| $50.00 | |||
| Adjusted Balance Per Bank as at January 31, 2021 (This amount should agree with the balance on the trust journal [Exhibit XIV] and the trust liability reconciliation [Exhibit XVII] at the end of the month) | $2,649.00 |
LMS1-CRF
| Balance Per Bank Statement as at January 31, 2021 (This balance is taken from the bank statement shown above.) | $10,000.00 | ||
| Add: Outstanding Deposits & Transfers (Note: Desposits and transfers instructed before the end of the month per the Trust Journal but which are not yet shown on the bank statement should be entered here.) | $50.00 | ||
| Subtotal | $50.00 | ||
| Less: Outstanding Cheques & Transfers (Note: Cheques and transfers issue before the end of the month per the Trust Journal but which have not yet cleared the account should be entered here.) | |||
| Cheque/Transfer Reference | Date | Amount | |
| nil | |||
| $0 | |||
| Adjusted Balance Per Bank as at January 31, 2021 (This amount should agree with the balance on the trust journal [Exhibit XIV] and the trust liability reconciliation [Exhibit XVII] at the end of the month) | $10,050.00 |
EXHIBIT XVIIPermanent link to this section
Strata Property ManagementPermanent link to this section
Trust Liability ReconciliationPermanent link to this section
The trust liability reconciliation is a summary of each individual outstanding client ledger (per Exhibit XV).
GHI Strata Management Inc. has ensured that the monthly trust liability reconciliation(s) were prepared no later than five weeks after the monthly accounting cut-off date for the accounts or immediately on receipt of the trust bank statement(s).
GHI Strata Management Inc. has also ensured that the total trust funds in the trust liability reconciliation(s) agree to the adjusted bank balance (see Exhibit XVI).
| Strata Property Reference # | Trust Funds |
|---|---|
| LMS1 | $2,649.00 |
| LMS1-CRF | $10,50.00 |
| Total | $12,699.00 |