July 31, 2025Back to Latest

Over the last few years, there has been an increase in holds on lawyers’ cheques in real estate transactions, causing an uptick in trust shortages. 

Paper-based payments such as cheques, certified cheques, money orders and bank drafts can be subject to forgery and fraud. They can also be returned due to insufficient funds, holds, restrictions on deposits or stop payments. As a result, financial institutions have adopted strategies to minimize risks, which sometimes involve holding money until they can verify the funds. 

A financial institution may hold money to check that: 

• the person or company who wrote the cheque has enough money to cover it; 
• the person or company who wrote the cheque has not put a stop payment on it; 
• the details of the cheque have not been altered by someone other than the writer; or, 
• the account the cheque was written from is still open. 

We understand that a hold on a legitimate payment can cause potential issues with closings and lawyers’ undertakings, as it can take three to five business days to be validated, if not more. This process is the new standard for banks, so law firms must prioritize client management and set their clients’ expectations accordingly.  

A lawyer must always maintain sufficient funds in each trust account to meet all obligations to clients (Rules of the Law Society of Alberta, Rule 119.39(1)).  

Responsible Lawyers are obligated to report any attempted or successful fraud or theft from trust or general accounts (Rule 119.40).

For more information on trust shortages, how to prevent them and how to report them, visit Additional Reporting or view this detailed resource on our website. For further details on cheque holding periods and access to funds for small- and medium-sized businesses, including consumer rights, visit the Financial Consumer Agency of Canada website. For more information on the Canadian payments system, please visit the Payments Canada website.  

Lawyers can contact the Office of the Practice Advisors to discuss any ethical concerns related to this issue.