Solicitor's Trust Accounts - Who gets the interest?

[Frizzle]

If there is a delay between settlement of a proeprty and the disbursement of those funds and the money sits in the solicitor's trust acount for a week or so, who gets the interest from those funds? Is it supposed to be added to the client's payout or does it just get absorbed by the solicitor, for services rendered?
Frizzle

 

[Peter_Tersteeg]

Generally speaking, solicitor or real estate agent trust accounts do not earn interest.

 

[Frizzle]

Thanks, PT_Bear, it did have me curious!

 

[JDM]

PT Bear is correct, however a situation similar to what you are asking is possible.

Clause 2.3 of the standard REIQ contract allows for deposits to be invested in an interest bearing account and as such your situation could arise. In the example you used, the Vendor is entitled to all interest the deposit has generated.

The interest always goes to the party entitled to the deposit unless otherwise specified. The flip side of this is that this same party also bears the risk should the investment generate a negative result.

 

[Peterw]

In Qld, and I think the other States are similar, the Banks that hold the Trust Accounts, actually pay "interest" on Trust Accounts funds, to the State Government. Ins called a notional rate, so the banks do not get the complete benefit of the funds. If it looks like being a longer than usual settlement, the deposit sis worth investing, and with the banks being Government backed, the investment would be considered sound.
regards
Peter Weiss

 

[marky_mark]

It varies between state and also between the real estate office. Some offices do accrue interest on their trust account which is then splity 50/50% between vendor and purchaser and some real estate offices don't use an interest bearing account.