Rules for Holding, Depositing, and Disbursing Funds
Condominium managers who receive and manage funds on behalf of a condominium corporation must comply with trust account requirements under the Real Estate Act (REA) and Real Estate Act Rules. These requirements ensure that funds are handled ethically, securely, and in compliance with the law. Key requirements include:
Holding Trust Money: All funds received on behalf of a condominium corporation must be held in a separate trust account to prevent commingling with other funds.
Depositing Funds: Trust money must be deposited "as soon as possible", ensuring timely record-keeping.
Disbursing Funds: Disbursements must only be made in accordance with the condominium corporation’s financial obligations and must be properly documented.
RECA’s Role in Regulating Trust Accounts
The Real Estate Council of Alberta (RECA) regulates trust accounts by:
Enforcing compliance with the Real Estate Act and REA Rules.
Conducting audits and investigating complaints related to trust account mismanagement.
Setting guidelines for proper trust account record-keeping and reporting.
RECA ensures that condominium managers and brokerages managing trust funds meet legal and ethical standards to protect condominium corporations and unit owners.
Manager’s Role in Trust Account Oversight
Monthly Reconciliation and Reporting Obligations
Condominium managers are responsible for ensuring accurate record-keeping and financial oversight of trust accounts. This includes:
Monthly reconciliations to compare bank records with internal financial statements.
Maintaining detailed records of all deposits, withdrawals, and account balances.
Providing financial reports to the condominium board in compliance with legal and contractual obligations.
Preventing Fraud and Mismanagement of Funds
Trust account mismanagement, whether intentional or due to negligence, can result in financial loss, legal consequences, and loss of licensure. To prevent this, condominium managers must:
Ensure all transactions are documented and approved by the board.
Implement financial controls, such as dual authorization for withdrawals.
Monitor for signs of fraud, including unauthorized transactions or missing funds.
Failure to comply with trust account regulations can lead to penalties under the Real Estate Act Rules and may result in disciplinary action by RECA.
Developing a Compliance Checklist for Trust Account Management
To ensure compliance with Alberta’s trust account regulations, condominium managers should follow this checklist:
1. Trust Account Setup
Ensure all funds are deposited into a properly designated trust account.
Open separate accounts for operating funds and reserve funds as required by law.
Maintain accurate banking details and account agreements.
2. Financial Record-Keeping
Record all transactions promptly, including deposits, withdrawals, and interest earned.
Keep copies of bank statements, invoices, and receipts for all trust fund activities.
Perform monthly reconciliations to ensure records match bank balances.
3. Disbursement and Approval Process
Ensure all payments from trust accounts are board-approved and properly documented.
Require dual authorization for withdrawals to prevent unauthorized transactions.
Retain supporting financial documents for auditing and reporting.
4. Compliance with RECA Regulations
Adhere to all RECA trust account rules and financial reporting deadlines.
Respond promptly to RECA audits or inquiries regarding trust account management.
Train staff on trust account regulations to ensure ongoing compliance.
5. Fraud Prevention and Internal Audits
Monitor irregular transactions and investigate discrepancies immediately.
Conduct internal financial audits to verify compliance.
Report any suspected fraud or financial mismanagement to RECA.
