IBD Trust Account (Special Trust)

IBD Trust Account (Special Trust)

An IBD trust account is known as a Special Trust Account and is sometimes used if the buyer and seller agree to invest the deposit in a special trust account that bears interest. The buyer and seller will agree to who is entitled to the interest on settlement prior to the deposit being invested eg. 50/50 split.

In most circumstances, the contract details will be entered into Aro, then the Buyer will pay the deposit into the Sales Trust Account as normal. 

Set up the IBD Trust Account

We need to set up the special trust account in Aro.
  1. Hover over the Finances menu.
  2. Click on Trust Accounts.

  1. Click on + Add Account on the right.

  1. You will now be taken to the Add Trust Bank Account form.
  2. Enter all details you have for your Trust Account. 
  3. In the Trust Type dropdown, ensure you select IBD Trust.

  1. Once you have filled in all compulsory details (marked with a red asterix ) you can click on Save.
  2. A Trust Account can only be linked to one Contact/Beneficiary within Aro. However you can name both Beneficiaries in the Trust Account name if the interest is going to be split between the two.

Add Account to Listing for Buyer

In the trust account tab on the listing we need to add an account for the buyer using the new IBD trust account.
  1. Go to your Listing
  2. Click on the Trust Account tab on the left
  3. Click on + Add Account

  1. You will now be taken to the Add Account page.
  2. Select the IDB Trust account in the dropdown.
  3. Account Type will be Buyer
  4. Status will be Open
  5. Select the correct Contract in the dropdown.
  6. Held in Trust for the Buyer.

Move the funds from the Sales Trust to the IBD Trust

When the IBD Trust account is open, you will be physically transferring the funds from your sales trust into the IBD trust. We need to add these transactions into Aro.
  1. Click into the Trust Accounts tab on the left.
  2. In the Buyers Trust account (where the money was originally receipted), click on Spend Funds.

  1. Enter the details for the amount being transferred into the IBD account.
  2. Now click into the Buyers IBD Account tab.
  3. Click on Receive Funds.

  1. Enter the details for the amount being received into the IBD account.
  2. The funds will sit in the IBD trust account until the property settles.
Note - the IBD trust account does not need to be reconciled however you do need to print the EOM reports for this trust. The interest will be accounted for when the account is closed - see further instructions below. 

Upon Settlement - Money is transferred back to the Sales Trust with interest

When the property settles, your bank will transfer the funds including interest back into the Sales Trust account. This transaction needs to be entered into Aro. 
  1. Change the Listing status to Settled and complete the Contract details.
  2. In the Buyers IBD Account, enter a Spend Funds to move the money out of the special trust.
  3. In the Sellers Trust Account, enter a Receive Funds for the Deposit amount plus any interest portion they are entitled to.
  4. If the Buyers are entitled to interest, also enter a Receive Funds for their interest into their Buyers Trust Account.
Process the payments to the Seller and to your office for commission as normal. 

You must 'Close' the IBD account - Finances>Trust Accounts>select the Trust>Edit>Close