Solicitors' Accounts
When should you pay money into the solicitor's OFFICE account? - ANSWER 1. Basic rule = office
money into the office account
2. Money received from the client in settlement of a bill of costs
3. Money received from the client in full or partial reimbursement of disbursements
4. Money received from the client in full or partial reimbursement of disbursements which have been
incurred but not yet paid (exception for professional disbursements)
Where are the requirements for solicitors to keep accounting records for client money? - ANSWER
Part 4 of the Rules specifies how the accounts of solicitors must be kept.
Under Rule 29 every solicitor must at all times keep properly written-up accounts.
Where can mortgage funds be kept? - ANSWER Rule 29.10 permits that, although the mortgage
funds belong to the lender until completion, it can be recorded in the client ledger of the buyer-
client, as long as:
- The funds are clearly identifiable and
- The lender is an institutional lender which provides standard term mortgages in normal course of
activities.
The firm still has the option of opening a separate ledger for the lender.
Where does client cash go in the ledger? - ANSWER Money belonging to the clients - right hand
side
Where does office cash go in the ledger? - ANSWER Money belonging to the firm - left hand side
Account for receipt of the deposit from the buyer pending exchange: - ANSWER CR client
ledger: buyer client DR client cash
Account for the payment of the deposit to the seller's solicitors: - ANSWER DR client ledger: buyer
client
CR client cash
Accounting for a VAT invoice: - ANSWER DR office ledger with the VAT payable on the profits costs
CR VAT account with the VAT
Accounting for an abatement of costs: - ANSWER CR office ledger for the client with the
abatement (excluding VAT)
DR profit costs with the abatement of costs (excluding VAT)
CR office ledger for the client with the VAT on the abatement
DR VAT account with the VAT on the abatement
Accounting for costs charged to a bank where there is a separate ledger for the lender: -
ANSWER The profit costs are recorded in the office ledgers for each client in the usual way.
, Solicitors' Accounts
Then, it is necessary to transfer the costs from the lender's office ledger to the buyer/seller's office
ledger, and then transfer the money from the buyer/seller's client ledger to its office ledger in order
to pay both invoices.
Accounting for costs charged to a bank where there is no separate ledger for the lender: -
ANSWER Profit costs recorded in the buyer/seller client's office ledger
Accounting for deposit payment to the client (agent transaction): - ANSWER DR client ledger:
seller client
CR client cash
Accounting for deposit transferral upon completion of sale (stakeholder transaction): -
ANSWER DR client ledger: stakeholder
CR client ledger: seller client
Accounting for interest paid on money held in a general client account: - ANSWER CR interest
received ledger
DR office cash
DR interest paid ledger
CR office cash
CR client ledger of the client who is being paid the interest
DR client cash
Accounting for method 1 for mortgage funds (in buyer/borrower client ledger): - ANSWER
CR client ledger for the buyer/borrower
DR client cash
Accounting for method 2 for mortgage funds (separate ledger for lender) - ANSWER CR client
ledger for the lender
DR client cash
DR client ledger for the lender
CR client ledger for the client/burrower
Accounting for putting money into the separate designated client account: - ANSWER CR separate
designated client ledger
DR separate designated client cash
Accounting for receipt of deposit cheque at exchange of contracts (agent transaction): -
ANSWER CR client ledger: seller client
When should you pay money into the solicitor's OFFICE account? - ANSWER 1. Basic rule = office
money into the office account
2. Money received from the client in settlement of a bill of costs
3. Money received from the client in full or partial reimbursement of disbursements
4. Money received from the client in full or partial reimbursement of disbursements which have been
incurred but not yet paid (exception for professional disbursements)
Where are the requirements for solicitors to keep accounting records for client money? - ANSWER
Part 4 of the Rules specifies how the accounts of solicitors must be kept.
Under Rule 29 every solicitor must at all times keep properly written-up accounts.
Where can mortgage funds be kept? - ANSWER Rule 29.10 permits that, although the mortgage
funds belong to the lender until completion, it can be recorded in the client ledger of the buyer-
client, as long as:
- The funds are clearly identifiable and
- The lender is an institutional lender which provides standard term mortgages in normal course of
activities.
The firm still has the option of opening a separate ledger for the lender.
Where does client cash go in the ledger? - ANSWER Money belonging to the clients - right hand
side
Where does office cash go in the ledger? - ANSWER Money belonging to the firm - left hand side
Account for receipt of the deposit from the buyer pending exchange: - ANSWER CR client
ledger: buyer client DR client cash
Account for the payment of the deposit to the seller's solicitors: - ANSWER DR client ledger: buyer
client
CR client cash
Accounting for a VAT invoice: - ANSWER DR office ledger with the VAT payable on the profits costs
CR VAT account with the VAT
Accounting for an abatement of costs: - ANSWER CR office ledger for the client with the
abatement (excluding VAT)
DR profit costs with the abatement of costs (excluding VAT)
CR office ledger for the client with the VAT on the abatement
DR VAT account with the VAT on the abatement
Accounting for costs charged to a bank where there is a separate ledger for the lender: -
ANSWER The profit costs are recorded in the office ledgers for each client in the usual way.
, Solicitors' Accounts
Then, it is necessary to transfer the costs from the lender's office ledger to the buyer/seller's office
ledger, and then transfer the money from the buyer/seller's client ledger to its office ledger in order
to pay both invoices.
Accounting for costs charged to a bank where there is no separate ledger for the lender: -
ANSWER Profit costs recorded in the buyer/seller client's office ledger
Accounting for deposit payment to the client (agent transaction): - ANSWER DR client ledger:
seller client
CR client cash
Accounting for deposit transferral upon completion of sale (stakeholder transaction): -
ANSWER DR client ledger: stakeholder
CR client ledger: seller client
Accounting for interest paid on money held in a general client account: - ANSWER CR interest
received ledger
DR office cash
DR interest paid ledger
CR office cash
CR client ledger of the client who is being paid the interest
DR client cash
Accounting for method 1 for mortgage funds (in buyer/borrower client ledger): - ANSWER
CR client ledger for the buyer/borrower
DR client cash
Accounting for method 2 for mortgage funds (separate ledger for lender) - ANSWER CR client
ledger for the lender
DR client cash
DR client ledger for the lender
CR client ledger for the client/burrower
Accounting for putting money into the separate designated client account: - ANSWER CR separate
designated client ledger
DR separate designated client cash
Accounting for receipt of deposit cheque at exchange of contracts (agent transaction): -
ANSWER CR client ledger: seller client
