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September 19, 2015 at 2:18 pm #992864
I’m starting a small café. By the end of this week I have to sing lease contract. Real estate asked us to put bond money around 30000$ in their trust account but I prefer to put money in bank and give them a letter of bank guarantee . Is anyone can help me and tell me which way is safer? is real estate trust account reliable?September 20, 2015 at 3:06 am #1188567Millie SlaterMember
- Total posts: 33
From what I know and understand, it is good if the payment amount for the lease goes into the real estate agents’ trust (or lawyer’s trust) account and then they take their commission out of that and the balance is paid to the landlord.
From my understanding it is not as safe if you put it into a business or personal bank account. It is therefore good to make sure the name of the account has “trust” in it.
Sensibly you put it into a trust account as this usually gives you more protection.
In saying that, I do not know the individuals or businesses involved and cannot vouch for anyone in any situation I’m not involved in. All I am offering is knowledge based on our accounting practices.
Hope it helps. Have a great day.September 20, 2015 at 3:25 am #1188568
thanks Millie for your reply. Because I am very new in Business so I am not familiar with real estate rules but bank is something that everyone work with it even if they don’t have business. That is very good to hear from expert like you here but still I have question:
If I put money in trust account all interest and benefit will goes to landlord?September 20, 2015 at 3:29 am #1188569Millie SlaterMember
- Total posts: 33
No, I don’t think so. From my understanding it is held in trust for you so interest accumulated or earned while held belongs to you and you will get that back.September 20, 2015 at 4:02 am #1188570Jason RamageParticipant
- Total posts: 3,161
Trusts in real estate tend to be non interest bearing as it becomes complicating tracking, you should look into IG that is secured against a Term Deposit so you can earn a little to cover the fees for the IG to secure the lease..Jason Ramage | Lucas Arthur Pty Ltd | E: email@example.com P: 61 3 8324 0344 M: 61 412 244 888September 20, 2015 at 11:17 am #1188571
so you mean IG stand for Indemnity guarantee is easier to put bond money in?September 21, 2015 at 2:11 am #1188572TaxopiaMember
- Total posts: 301
I think you will find that giving them a bank rental bond is the same risk for you in that they can cash it at any time and you cannot prevent that occurring. You also need to give the bank the money so that they can issue the bond.September 21, 2015 at 7:44 am #1188573Jason RamageParticipant
MrTax, post: 221150, member: 68601 wrote:I think you will find that giving them a bank rental bond is the same risk for you in that they can cash it at any time and you cannot prevent that occurring. You also need to give the bank the money so that they can issue the bond.
- Total posts: 3,161
Great advice, although not sure OP was asking how easily they can access the funds.. Although, in my experience, breaking the IG from a bank has to be ‘proven’ as outlined in the IG.. The bank is an IMPARTIAL entity, and although the Realty firm has similar obligations, their client is ultimately the landlord.
Not saying anything untoward would occur, although technically speaking the Banks IG would offer a better option for the below 2 reasons:
1: Bank requires documents and proof to be provided to be cashed in and is easily traceable as to what was and why it was broken.
2: With IG in bank, its secured against your cash in a TD (potentially) which you will earn interest from whilst the funds are being held to cover the IG. I am not sure if this is the case with the trust account in a real estate firm (think they hold in zero interest for easier recording purposes).
CheerioJason Ramage | Lucas Arthur Pty Ltd | E: firstname.lastname@example.org P: 61 3 8324 0344 M: 61 412 244 888
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