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Where deposit moneys in the normal course of a conveyancing transaction are paid by a purchaser to a vendor’s solicitor, those funds are held by the vendor’s solicitor:

1. As a trustee for the purchaser pending the coming into being of a binding contract for sale (where so requested by the purchaser). While holding the deposit in trust for the purchaser, a vendor’s solicitor, as trustee for the purchaser, cannot pay the deposit monies to the vendor or to any other party without the consent of the purchaser.
2. When a binding contract for sale has come into being, as stakeholder for both the vendor and the purchaser. According to Wylie’s Irish Conveyancing Law (2^nd edition), “a stakeholder is a person whose duty it is to hold money in his hands not for one or other of the parties to a transaction, but for both, until some event occurs upon the happening of which it becomes his duty to hand over the money to one or other of the parties, [for example] to the vendor if the sale goes through or to the purchaser if it does not. Pending that event, he must hold onto the money and must not release it to one of the parties without the consent of the other.” It is clear, therefore, that a vendor’s solicitor, as stakeholder for both vendor and purchaser, cannot pay the money to either party until the contract proceeds to completion, or it comes to an end through rescission or otherwise, or the deposit is forfeited by the vendor in accordance with the terms of the contract.

Until a conveyancing transaction has actually completed, it is not certain that it will complete, or when it might complete, or who the ultimate owner of deposit moneys (held by a solicitor in trust or as stakeholder) will be. It is therefore never permissible for a solicitor to deduct fees prior to completion of a sale from deposit monies held by the solicitor in any of those capacities, whether or not so authorised by the solicitor’s client.

John Elliot,
Registrar of Solicitors and Director of Regulation