Did you know that a statutory trust account is often needed to ensure everything goes smoothly in the days leading up to settlement? No. Most clients don’t do this, but it can be the difference between getting paid on time or waiting.
A statutory trust account is held by a third party where other people’s money is kept. The person who owns the cash tells how the money in the report is used.
Why Should You Always Use A Conveyancer Who Maintains A Statutory Trust Account?
When we tell clients about our Statutory Trust Account, they first want to know, “Is my money safe?” On many levels, the answer is YES!
First, lawyers are meticulous about using their statutory trust accounts. We know that it’s a privilege to handle a trust account and that it’s easy to lose that privilege. To do this, all firms must set up processes and procedures for running their trust accounts. The statutory trust account is also checked twice a year to ensure it is used correctly.
Second, the Fidelity Fund covers up to $2 million of the money put into our firm’s Statutory Trust Account. This is a fund that was set up to cover deposited funds if a practitioner committed fraud. This means that if your money is taken fraudulently from the Trust Account, the practitioner who did it would face civil and criminal penalties, including losing their lawyer licence. The fidelity fund would protect you by replacing the stolen money. Altogether, you are safe.
What Do Trust Accounts Do In Real Estate Settlements?
Buying a house is one of the few times you need a lot of money in one place simultaneously. However, due to the restrictions banks put in place to prevent fraud, it can be hard to combine these funds and make them available, even with the advances in internet banking.
Working with a conveyancer or lawyer with a trust account means that, as a client, you have a central place to put your money so that your lawyer can write checks on your behalf on the day of settlement. Yes!
I know that sounds late, but we have to wait for the other side of the transaction to tell us how to fill out the check. This means it’s not unusual for money to be asked for at the last minute.
When It Is Imperative
Clients who bank with a small bank deserve special attention. When choosing a conveyancer or property lawyer, it is essential to consider how important it is to work with an advisor with the available facility. Even though many of the bigger banks offer offset accounts, it is rare for the smaller banks to do so. This can make it hard for you to settle on time.
Important Point To Remember
Buying a house is a stressful process; if you haven’t done it before, it’s easy to miss some important parts. It can be frustrating to get a low price upfront that doesn’t meet your needs. In the same way, the costs of waiting too long to settle (in the form of penalty interest) are very high.
When buying conveyancing services, we advise our clients to figure out which services they need and which they don’t. They should also understand the importance of critical parts of the process, such as the searches, the trust account, professional indemnity insurance, and advocacy, so they can make an informed choice. We are proud that we were the best conveyancers in Australia at the time.