Are a firm's real estate closing escrow accounts subject to the lawyer trust-account and IOLTA rules?
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This page answers the general question as of 1994. Ezel answers yours: whether it's allowed on your facts, under the current Maine Rules of Professional Conduct, with citations.
Plain-English summary
The Commission was asked how Maine Bar Rules 3.6(e) and 6 (as amended effective July 1, 1994) applied to escrow accounts a firm used exclusively for real estate closings. Some of those accounts bore interest on an average daily balance and some did not, and funds were customarily deposited the day of disbursement so the "float" was minimal, often a day or two.
The Commission answered that these accounts are subject to Rule 3.6(e) and Rule 6. Neither rule distinguishes between such "escrow" accounts and any other trust account. As amended, the rule gave the attorney two choices: maintain the accounts as IOLTA accounts or as non-interest-bearing (non-IOLTA) accounts. The amended rule imposed an "all-in or all-out" requirement: all such accounts must be IOLTA, or all must be non-interest-bearing non-IOLTA, with the single exception (effective April 29, 1994) for funds of the United States Government. Except in that one case, the rule does not appear to permit a lawyer or firm to hold both IOLTA and non-IOLTA accounts. In either case, the Rule 6 reporting requirements apply to each such account.
Currency note
This opinion was issued in 1994, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.
Common questions
Q: Were real estate closing escrow accounts treated as lawyer trust accounts?
A: The opinion concluded yes. It found that neither Rule 3.6(e) nor Rule 6 distinguishes such escrow accounts from any other trust account, so both rules applied.
Q: Could a firm keep some escrow accounts interest-bearing and others not?
A: Generally no. The opinion read the amended rule to impose an "all-in or all-out" requirement: all such accounts must be IOLTA or all must be non-interest-bearing non-IOLTA, with the only exception being funds of the United States Government.
Q: Did the reporting rule apply even with minimal float?
A: Yes. The opinion concluded the Rule 6 reporting requirements apply to each such account regardless, and it drew no exception for the short one-or-two-day float typical of closing accounts.
Background and rules framework
The opinion interprets Maine Bar Rule 3.6(e) (handling of client trust funds, including the IOLTA / non-IOLTA election and the "all-in or all-out" requirement) and Rule 6 (trust-account reporting). These correspond to ABA Model Rule 1.15 (safekeeping property; client trust accounts).
Citations and references
Rules of Professional Conduct:
- Model Rule 1.15 (safekeeping property; trust accounts)
- Maine Bar Rule 3.6(e), 3.6(e)(4), 3.6(e)(5); Rule 6
See also
Source
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
Issued by the Professional Ethics Commission
Date Issued: June 30, 1994
Facts
The Commission has received an inquiry concerning the proper interpretation of Maine Bar Rules 3.6(e) and 6 (as amended effective July 1, 1994) with respect to the administration of escrow accounts used by the firm exclusively in connection with real estate closings. Some of the ?escrow accounts? bear interest on an average daily balance; some bear no interest. The funds are customarily deposited in the accounts the day of the disbursements, so the ?float? in the account is minimal, usually just a day or two.
Question
Are the ?real estate escrow accounts? described above subject to the provisions of Rule 3.6(e) and Rule 6?
Answer
Yes.
Discussion
Neither of the Rules cited makes any distinction between the ?escrow? accounts described above and any other trust account. The Rule as recently amended gives the attorney two choices. Either the accounts may be maintained and administered as IOLTA accounts or they may be maintained as non-interest bearing (i.e., non-IOLTA) accounts. The new Rule requires that either all such accounts be IOLTA accounts or that all such accounts be non-interest bearing non-IOLTA accounts (see Rule 3.6(e)(4),(5), the single exception from the ?all-in or all-out? requirement being for funds of the United States Government (see amendments to Maine Bar Rules 3.6(e)(4) and (5), effective April 29, 1994). As drafted, except in that single exception, the Rule does not appear to permit a lawyer or a firm to have both IOLTA and non-IOLTA accounts.
In either case the reporting requirements set forth in Maine Bar Rule 6 are applicable with respect to each such account.
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