Trust accounts | A windfall for the Chamber of Notaries

Where does the interest of the sums entrusted in trust to the notaries go when buying a house or a condo? At the Chamber of Notaries, which has thus constituted a woolen stocking of 139 million dollars.

Louise Leduc

The Press

Called the Notarial Studies Fund, this fund enabled the Chambre des notaires to replenish an operating deficit, buy part of a building in downtown Montreal and distribute financial assistance to various organizations .

Any mortgage used to finance a property must be made by notarial deed. The time for the notary to make the necessary checks can take 24 hours or several days. This generates interest, which adds to the Notarial Studies Fund.

In an interview, Mr.^e Hélène Potvin, President of the Chamber of Notaries, notes that “the incredible real estate boom of recent years” has generated “more transactions”, therefore “more money passing through notaries’ accounts” and, therefore, interests.

Why does the interest generated by trust funds – from accounts entrusted by clients – go to the Chambre des notaires?

To this, M.^e Potvin replied that in accordance with the law and its governance policy, the Chambre des notaires ensures “that all of society benefits from this”, through grants paid to various organizations.

On the website of the Chambre des notaires, it is stated that the Notarial Studies Fund, created in 1973, has made it possible to subsidize “numerous research projects and multiple activities […] in the areas of law and justice. And the list is public, note M^e Potwine.

Insufficient membership dues

Called by The Press to comment, François Dauphin, Chairman of the Board and President and CEO of the Institute for the Governance of Private and Public Organizations, immersed himself in the study of the most recent annual report of the Chambre des notaires.

“It’s done within the legal framework, but it’s quite special,” he begins.

Because if the Chamber of Notaries puts forward the fact that it distributes money for the advancement of the profession, it also finds itself managing considerable funds, doing business and all this ends up alienating it. “of its primary mission, which is to protect the public”.

He frowns in particular when he sees that the Chamber pays itself funds to make up for its annual deficit. An interfund transfer of $15 million was made from the Notarial Studies Fund to the general fund, according to the 2020-2021 annual report.

This means that membership dues are insufficient “to pay on their own the regular expenses associated with the activities of the Chambre des notaires”, which amounts “indirectly to financing the membership dues”, says Mr. Dauphin.

He wonders if “the government and the Office des professions would not have an interest in revising its regulations”, particularly in light of the context at the Chambre des notaires.

M^e Hélène Potvin points out that this is entirely appropriate in the sense that the “internal activities” of the Chambre des notaires are among the six purposes for which money from the Notarial Studies Fund can be used within the meaning of the law. These six “objects” are law reform; legal research; promote legal education and information; promote the establishment and maintenance of law library services; promote the quality of the professional services of notaries; and providing for the financing of the compensation fund of the Order.

Given the deficit in the operating fund, shouldn’t membership fees be increased?

M^e Potvin replied that the issue is reviewed every year, but as long as “our activities are eligible” and “the funds are there”, it is not considered at the present time.

Insofar as the mortgage used to finance a property must be made by notarial deed, does the notarial fund have an inexhaustible source of money? M^e Potvin responds that advances in technology and instant money transfer could eventually be a game changer.

The Chamber of Notaries partly owner of a tower

As for the building at 2045 Stanley Street in downtown Montreal, M^e Potvin indicates in an interview that “the Chamber of Notaries owns half through a trust” and that it is not the manager of the building (where its offices are located).

In a press release published in 2016, the real estate investment fund Nobel announced the acquisition of 50% of the shares of Société en commandite 2045 Stanley, as well as 50% of the shares, specifying that “the other half of the shares and shares belongs to the Notarial Real Estate Trust”.

In its 2016 press release, the Nobel Real Estate Investment Trust stated that the value of this property “is over 25.5 million”.

Variable annual aid

What about the annual distribution of financial assistance to the selected organizations?

M^e Potvin underlines that in fact, the financial assistance fluctuates according to the requests made to the Chambre des notaires and according to the sums to be distributed to the organizations chosen.

In June 2022, the two main associations of notaries, the Association professionnelle des notaires du Québec (APNQ) and the Union des notaires du Québec (UNQ), received 1.2 million each over two years “for the development of projects and activities helping them to play a leading role in the advancement of the notarial profession”.

What about the Bar?

Does the Bar also have a fund made up of interest generated by accounts held in trust? Yes, it currently stands at 20 million (and includes some donations and legacies, as does the Notarial Studies Fund). Through Martine Meilleur, public relations consultant, the Bar says it distributes the funds thus collected by respecting the same six criteria as those mentioned above.