Interest on Funds Held in Trust in an Offer to Purchase

You've paid. The receipt landed in your inbox. The money has left your account and now sits somewhere between you and the seller, waiting. Nobody said what happens to it while it waits, and the OTP didn't mention anything about interest. If you're wondering whether you're entitled to the return on funds you've already committed, you're asking the right question, and you should have the answer before you sign.

What is interest on funds held in trust in a property sale?

Interest on funds held in trust is the return generated on your funds paid into the conveyancer's trust account before transfer is completed. When you pay a deposit or the full purchase price early, those funds sit in the trust account while compliance certificates are obtained, clearance figures are issued, and registration is prepared. This waiting period can last weeks or months. Unless the Offer to Purchase specifies otherwise, the interest earned on those funds typically belongs to you, but that entitlement depends on what is written in the agreement, not on what is assumed.

Key Takeaways

• Interest earned on funds held in a conveyancer's trust account typically belongs to you, because the funds are your money until transfer is complete. This position isn't automatic and must be recorded in the OTP.
• The OTP must specify who is entitled to interest earned during the trust period. Without a written clause, uncertainty can surface when transfer approaches and expectations on both sides have drifted apart.
• The conveyancer acts on written instruction, not on assumptions of fairness. If the OTP is silent on interest, the conveyancer can't allocate it based on what seems equitable.
• The amount of interest earned is often modest, but the principle isn't. Your funds are committed for weeks or months while the transfer process runs its course. You have a legitimate interest in receiving the return on that commitment.
• Address interest in the OTP before signing, not after funds have already moved. It's a detail that disappears quietly when agreed upfront and surfaces at the worst possible moment when left unwritten.

The Problem: When Waiting Is Treated as Neutral

Once money has been paid into trust, most buyers stop thinking about it. The focus shifts to moving dates, packing boxes, and registration timelines. Interest feels like a technical detail, too small to matter in the context of a property purchase.

This is where misunderstanding begins.

Money held in trust isn't frozen in time. It is held under strict rules, but it may still generate interest. If the agreement doesn't deal with that interest clearly, silence can turn into assumption, and assumption into disagreement.

Why This Often Comes as a Surprise

You may be used to interest being linked to savings accounts or investments, not transactions. Sellers may assume that once funds are paid, everything connected to that money belongs to the sale itself.

Neither assumption is unusual. Both can be wrong.

Thetrust accountexists to protect funds, not to redistribute benefit by default. Without a written agreement, expectations on both sides may drift apart, only to meet again at the end of the process when emotions are already invested.

How the Law Treats Interest in Trust

When funds are paid into a conveyancer's trust account before transfer, they are held on your behalf unless agreed otherwise. In most cases, any interest earned belongs to you, because it is your money being held while the legal process runs its course.

However, this position relies on what is written. Conveyancers act strictly on instruction. If the Offer to Purchase is silent, or if it allocates interest differently, that instruction governs what happens.

This is why interest shouldn't be left to inference. A single sentence in the agreement can prevent uncertainty later.

Why Writing It Down Matters

Interest earned during transfer is often modest, but the principle isn't. It speaks to fairness. Your funds are committed early, sometimes for weeks or months, while compliance and registration take place. Recognising that cost through interest acknowledges the waiting.

When this detail is agreed upfront, it disappears quietly into the background where it belongs. When it is overlooked, it can surface at exactly the wrong time, just as the transaction is reaching its conclusion.

Quiet Certainty

Interest on funds held in trust isn't a strategy or a benefit to chase. It is a detail to be settled.

Contact Golden Homes before signing any offer. Our agents will confirm that your interest entitlement is addressed in the OTP before the document is presented for signature.

This topic raises specific questions. Here are the ones our agents hear most often.

For context on how trust interest connects to the broader payment structure, the purchase price clause covers deposits, lump sums, and payment deadlines as parts of a single binding agreement.

Frequently asked questions

Who is legally entitled to the interest earned on money held in a conveyancer's trust account?

In most South African property transactions, the interest earned on funds held in the conveyancer's trust account belongs to the buyer. The funds are the buyer's money until ownership transfers, the conveyancer holds them on trust on the buyer's behalf, not for personal use and not for the seller. However, this position depends entirely on what is recorded in the OTP. Conveyancers act strictly in accordance with the agreement and any written instructions attached to it. If the OTP allocates interest to the seller, or provides that interest will be waived, that written term governs. There is no subsequent adjustment based on fairness or assumption. This is why interest entitlement should not be left unaddressed. Buyers frequently assume it belongs to them. Sellers may assume it forms part of the purchase price. Without a written clause, both assumptions can coexist until transfer forces a discussion that the agreement should have pre-empted.

How much interest is usually earned, and is it worth worrying about?

The interest earned on funds held in a conveyancer's trust account is typically modest. Trust accounts are regulated for protection, not structured for return, and the interest rates applied are not comparable to investment or savings rates. The amount earned depends on the sum held, the interest rate in force, and the length of time between payment and transfer. On a large purchase price held for several months, the amount may be meaningful. On a deposit held for a few weeks, it may be small. The monetary amount is not the primary reason to address interest in the OTP. The reason is alignment. When interest entitlement is agreed before signing, neither party is surprised at the end of the process. When it is left unaddressed, the question surfaces at the point where the transaction should be concluding smoothly, which is exactly when a disagreement about a relatively modest amount creates the most disproportionate friction.

What happens if the Offer to Purchase says nothing about interest?

When the OTP is silent on interest, uncertainty enters the transaction. In practice, many conveyancers treat interest as belonging to the buyer, because the funds are held on the buyer's behalf. However, this approach is not guaranteed and may depend on the conveyancer's internal practice, additional instructions from the parties, or subsequent agreement. Silence creates room for assumption on both sides, and assumption is unreliable in legal transactions. A seller may argue that interest should attach to the purchase price; a buyer may assume entitlement without having secured it in writing. The conveyancer, bound by professional duty, cannot resolve the question based on what seems fair. A clause stating who is entitled to interest gives the conveyancer clear instruction and removes the question from the equation entirely. In property transactions, details agreed in writing before signing rarely cause difficulty. It is the unwritten ones that surface when the transaction should be finishing.

Can interest entitlement be agreed after funds have already been paid into trust?

Yes, but it is significantly more complicated than agreeing it before signing. Once funds are in trust and the transaction is in progress, any agreement about interest requires both parties to engage with a question that was not addressed at signing, often at a point when attention is on registration timelines, moving dates, and handovers rather than financial entitlements. The agreement must still be made in writing to be enforceable. A verbal understanding between the parties does not bind the conveyancer, who requires written instruction to allocate interest. If the parties have divergent expectations, which is likely if the OTP was silent, reaching written agreement under time pressure can be difficult. The conveyancer cannot act until the instruction is clear. The practical lesson is that addressing interest before signing costs nothing and takes one sentence. Addressing it after funds are in trust, when expectations have already formed on both sides, costs time and goodwill that the rest of the transaction cannot afford to lose.