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A trust account is a segregated bank account a licensed mortgage brokerage must use to hold money received from borrowers, lenders, or investors that isn't yet earned or due to the brokerage, keeping those client funds separate from the brokerage's own operating money.
In Ontario, FSRA generally requires a brokerage to hold only one trust account unless it has separate approval, and treats money received from a borrower, lender, or investor as trust funds by default, except for amounts clearly earned for completed services or reimbursed expenses. Brokerages that receive trust funds must reconcile the account monthly, and those with no trust activity in a fiscal year must still file an annual declaration confirming that.
Trust account handling is one of the most closely audited compliance areas for a brokerage, since mishandling client funds is a serious licensing risk. A broker arranging private or syndicated deals that involve holding investor funds, even briefly, should confirm with their principal broker exactly how those funds must be receipted, deposited, and reconciled before touching any money.
Segregated from operating funds: trust money belongs to the client, not the brokerage, and must be kept in an account separate from the brokerage's general operating account.
Regulator-specific rules: in Ontario, FSRA generally limits a brokerage to one trust account unless it has approval for more, and treats most funds received from borrowers, lenders, or investors as trust funds by default.
Monthly reconciliation required: brokerages that hold trust funds must reconcile the trust account on a regular, typically monthly, basis to confirm the funds on hand match what's owed to clients.
Serious compliance exposure: mishandling trust funds is treated as a significant licensing risk by every provincial regulator, since it goes directly to consumer protection and public trust in the brokerage channel.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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