Sending and Receiving Payments by Wire Transfer

In these interesting times, it’s becoming more common for wire transfers to be used in real estate transactions, whether it’s receiving mortgage funds, discharging a mortgage, or even payment from a client.

The Law Society of Ontario has compiled a comprehensive list of what to consider when receiving or sending a wire transfer.

Licensees who send or receive wire transfer payments should
- Inquire with their financial institution about the fees associated with such payments and how the fees will be deducted from their accounts, and
- Review their account services agreement, which may address such fees.

Licensees should also consider whether the financial institution’s services and rates allow them to comply with their professional obligations and meet the needs of their practice. 

To prepare for a discussion with their financial institution, the following information may assist licensees:
- Charges for Wire Transfer Fees. Financial institutions typically charge wire transfer fees on each wire transfer transaction and may charge a fee for both sending and receiving a payment by wire transfer.
- Outgoing Wire Transfers. The fee associated with sending a wire transfer is typically deducted from the sending licensee’s account in addition to the payment amount. For more information, see s. 9 of By-Law 9 and "Q: Am I permitted to accept a direct deposit to my trust account by client or a third party? Are deposits by way of electronic or wire transfer permitted?”
- Incoming Wire Transfers. Typically, the fee for receiving a wire transfer is debited by the receiving licensee’s financial institution in transit. That is, the licensee does not receive the full amount transferred by the sending licensee; the wire transfer fee is deducted by the receiving lawyer’s financial institution from the principal amount transferred.
- Amount of Wire Transfer Service Fee. The amount of the fee that a financial institution charges per wire transfer varies based on factors such as the financial institution, the type of account the account holder has, the geographical location from which the funds are sent, and the amount of funds transferred.
- Payment of Wire Transfer Fees. Licensees should take steps to have their financial institution deduct such service fees from their general account, not their trust account. Where this is not possible, for example, where a financial institution’s policies require that the service fee be debited from the account from which the funds are transferred or received (i.e., trust account), licensees must transfer the amount of the fee from their general account to their trust account.

In Ontario there’s nothing that prohibits receiving a direct deposit directly into your trust account (in By-Law 9). It’s recommended to consider the following before allowing a third-party payor to deposit funds directly into your trust account:

the risks associated with providing to the third-party payor details about your trust account necessary to facilitate the deposit (e.g., the name of your financial institution, branch or transit number, account number) and the method by which you are asked to provide them (e.g., void trust cheque)

whether providing these details about your trust account will permit the third-party payor to make future deposits, without your prior knowledge or permission

whether providing these details about your trust account will permit the third-party payor to remove funds from your trust account

the appropriate clearance period to apply before disbursing from these funds, considering the periods suggested by both the transmitting institution and your financial institution

whether your financial institution will charge a service fee for such a deposit and, if so, ensuring that the fee will be drawn from your general account and not your trust account

if the service fee will be deducted from the funds being advanced, determining who will be responsible for paying the fee (for more information in the context of wire transfers, see Q. When a payment is made by wire transfer, who is responsible for the wire transfer fees associated with sending or receiving the funds?), and

whether the deposit will generate the source documents you require to fulfill your financial books and record-keeping requirement under By-Law 9.

After considering the above points, it’s also recommended to obtain a copy of the confirmation documents generated when the funds were sent to you from the third-party payor. The confirmation should document the financial institution and account from which the funds were sent, the financial institution and account in which the funds were deposited (such as your trust account), the amount deposited, and the date and time of when the funds were sent. This will fulfill your financial record keeping obligations.

For more information from the Law Society of Ontario refer to this resource or this webpage.

Previously: Banks and credit unions accepting wire transfers for mortgage discharges