An out-of-state lender makes me keep its mortgage proceeds in a non-IOLTA account it controls. I move the funds to my Rhode Island IOLTA account on closing day. Does that comply with Rule 1.15?

Plain-English summary

A Rhode Island attorney conducts loan closings for an out-of-state lender. The lender requires the attorney to maintain a checking account with the lender, and when closings are conducted the lender deposits the mortgage proceeds into that out-of-state checking account. The attorney maintains an IOLTA client account in Rhode Island and insisted that the lender's account be designated as an IOLTA account, but the lender refused. As a result, the attorney withdraws the deposited funds on the day of the closing and deposits them into the attorney's Rhode Island IOLTA account. The attorney asked whether this conduct complies with Rule 1.15.

The panel agreed that Rule 1.15 ("Safekeeping Property") governs. It noted that Rule 1.15(d) provides, in pertinent part, that a lawyer shall deposit client funds in an interest-bearing trust account, and that Rule 1.15(d) sets out the specific requirements for an IOLTA account.

Based on the facts presented, the panel concluded that the proper course of action is to withdraw the funds from the non-conforming account and deposit them into the Rhode Island IOLTA account as soon as practicable.

In practice

Under this opinion, where an out-of-state lender will not designate its own account as IOLTA, an attorney handling loan closings satisfies Rule 1.15 by withdrawing the mortgage proceeds from that non-conforming account and depositing them into the attorney's Rhode Island IOLTA account as soon as practicable. The opinion frames the attorney's closing-day transfer as the proper course under Rule 1.15's trust-account requirements.

Common questions

Q: Does keeping funds in a lender's non-IOLTA account violate Rule 1.15?

A: Per the opinion, the proper course where the lender refuses to designate the account as IOLTA is to withdraw the funds from the non-conforming account and deposit them into the Rhode Island IOLTA account as soon as practicable.

Q: How fast do I need to move the funds?

A: Per the opinion, as soon as practicable; the panel approved the attorney's practice of withdrawing the funds on the day of the closing.

Q: What part of Rule 1.15 applies?

A: Per the opinion, Rule 1.15(d) requires a lawyer to deposit client funds in an interest-bearing trust account and sets out the specific requirements for an IOLTA account.

Background and rules framework

The opinion applies Rhode Island Rule 1.15 (safekeeping property), corresponding to Model Rule 1.15, and specifically Rule 1.15(d)'s requirement to deposit client funds in an interest-bearing trust account and the IOLTA-account requirements it enumerates. The panel measured the attorney's closing-day transfer against those requirements and found moving the funds to the Rhode Island IOLTA account as soon as practicable to be the proper course.

Citations and references

Rules of Professional Conduct:

• MR 1.15 (safekeeping property)
• RI RPC 1.15(d)

Statutes:

• None cited.

Cases:

• None cited.

Other opinions cited:

• None cited.

See also

• RI EAP Op. 92-45: Advancing Client Funds for Future Costs Must Follow Rule 1.15
• RI EAP Op. 92-47: Holding Settlement Funds Subject to a Third-Party Claim
• RI EAP Op. 92-82: Holding Settlement Funds Subject to a Prior Attorney's Lien

Currency note

This opinion was issued in 1992 (Opinion 92-84, issued November 18, 1992), after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rule 1.15 as originally adopted. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process, which amended Rule 1.15 (safekeeping property), and the IOLTA requirements have since been revised. 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 mentioned here.

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2092-84.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

ETHICS ADVISORY PANEL
Opinion 92-84, Request #312
Issued November 18, 1992

An attorney seeks Panel advice regarding Rule 1.15 entitled "Safekeeping Property." A Rhode Island attorney conducts loan closings for an out of state lender. The lender requires that the attorney maintain a checking account with the lender. The attorney maintains an IOLTA client account in Rhode Island. When the closings are conducted, the lender deposits the mortgage proceeds in the out of state checking account. The attorney informs the Panel that the attorney insisted that this account be designated as an IOLTA account, however, the lender refused to comply with this request. As a result, the attorney withdraws the deposited funds on the day of the closing and deposits them into the attorney's Rhode Island IOLTA account. The attorney asks whether this conduct complies with Rule 1.15 of the Rules of Professional Conduct.

The Panel agrees that Rule 1.15 entitled "Safekeeping Property" governs this inquiry. Specifically, Rule 1.15(d) provides in pertinent part that a lawyer shall deposit client's funds in an interest bearing trust account. Rule 1.15(d) lists the specific requirements with regard to an IOLTA account. Based upon the facts presented, the Panel believes the proper course of action is to withdraw the funds from the non-conforming account and to deposit them into the Rhode Island IOLTA account as soon as practicable.