There are 2 different categories of trust accounts, both of which are very closely controlled by an Act of Parliament, The Attorneys Act, The Rules of The Law Society, The Attorney’s Fidelity Guarantee Fund, as well as frequent regular audits in terms of the International Standards on Accounting and the Joint Attorneys and Accountants Committee, which have to be monitored by the Law Society.
- Interest earned on a separate Investment Trust Account will be paid to the client in terms of Section 78 (2A) of the Attorneys Act; less a percentage investment fee.
- An example is where a large deposit in a conveyancing transaction is received pending the registration of a property transfer. The money is normally invested in a money market equivalent account or a special long term fixed account based on how long the funds will have to be invested.
Current Account Interest
- Interest earned on a normal cheque/current/transmission Trust Account in terms of section 78 (2) of the Attorneys Act will be paid to the Attorneys Fidelity Guarantee Fund.
- This category refers to money being held for a short time period, where there would be no purpose in investing it.
- An example is receiving the costs, enabling a conveyancer to pay the purchaser’s transfer duty within a couple of days. Another example would be after the property transfer has been registered, whilst waiting for the proceeds of a bank guarantee to be paid into the trust current account from the purchaser’s bankers and/or the estate agent who originally received the deposit towards the purchase price. Interest earned on this current account must be paid to the Attorneys Fidelity Guarantee Fund.
- There is no legal basis for a law firm or attorney to receive any interest that is derived from any trust account whatsoever. It is a misconception that a law firm or any attorney is legally allowed to keep the interest generated from any trust account. It is almost impossible for an attorney to keep the interest, due to the frequent regular audits and controls imposed on all law firms by the Law Society. However, The Law Society permits an attorney to deduct a percentage from the investment.
To conclude, interest earned from a current trust account is paid to the Fidelity Fund and interest earned from invested trust money, less a percentage investment fee, is paid to the client. Further information can be obtained from the Attorneys Fidelity Fund website.
Denoon Sampson is the Director at Denoon Sampson Ndlovu Inc, currently ranked the ‘number 1’ top performing conveyancer by First National Bank Limited. He has 30 years of experience as a conveyancer, specialising in the full spectrum of property-related law and is often called upon to give talks or contribute content on related matters.