H. Restricted Trust Account
The restricted trust account is a separate trust bank account from the other two types of trust bank accounts.
The restricted trust account was created in order to accommodate electronic transfer through the Teranet Manitoba LP (“Teranet”) e-Registration system for Manitoba land titles transactions. Through a restricted trust account, a law firm may allow direct withdrawals to be made from it by Teranet when the proper procedures are followed and when the trust money is for the payment of land transfer tax and registration fees.
Some of the unique aspects of a restricted trust account include:
1. The only money that can be deposited into the restricted trust account is trust money for the payment of land transfer tax and registration fees at Teranet [Rule 5-47(1)].
2. Before being deposited into the restricted trust account, trust money must FIRST be deposited into the pooled trust account, updating the usual accounting records. Only after this process is completed in the pooled trust account can available funds be confirmed and a pooled trust cheque be written so that trust money can be deposited into the restricted trust account [Rules 5-44(1) and 5-47(1)].
3. If more money than is required for the matter is deposited into the restricted trust account, a trust cheque from the restricted trust account must be issued so that the excess money is paid immediately back to the pooled trust account from where the money originally came [5-47(2)].
As a trust bank account, all the basic requirements outlined earlier for pooled trust accounts and trust accounts generally also apply to a restricted trust account. For example, you need a book of original entry, client trust ledgers, and a monthly trust reconciliation for a restricted trust account [Rules 5-43(1) and (2)]. There are also specialized requirements regarding transaction numbering and supporting documentations for the Teranet withdrawals, as explained in detail in the Law Society’s eRegistration requirements.
Due to the unique nature of a restricted trust account, there is a unique checklist for completing the monthly trust reconciliation.