§ 622 — Escrow required

New York § 622

• Jurisdiction: New York
• Law GBS: General Business
• Art. 30: Health Club Services

Text

§ 622. Escrow required. All moneys received by a seller pursuant to a\ncontract for services for use by a buyer of a health club prior to the\nfull operation of such health club shall be placed in escrow.\n 1. Such funds shall be kept and maintained in an account separate and\napart from any account maintained by or for the seller's personal use or\nfor use in the construction or operation of the health club or for the\npayment or benefit of employees of the seller.\n 2. The escrow account shall be established in a bank or trust company\ndoing business in this state.\n 3. The escrow account shall provide that the purpose of the account is\nto protect the consumer in the event that the seller fails to complete\nsubstantially and to open the facility within one year following\nestablishment of the account. Any buyer who has advanced moneys on\ndeposit in the escrow account may maintain a representative action\npursuant to the provisions of the civil practice law and rules to close\nthe account and to release such moneys pro-rata to all buyers similarly\nsituated if such health club facility has not been substantially\ncompleted and opened within one year of establishment of the account or\nif the buyer has not had the full use of another similar facility during\nthis period.\n 4. Within three business days of a request therefor, a monthly\nstatement of the escrow account is to be furnished to consumers who have\nadvanced funds or obligation until such account is no longer required by\nthis article.\n 5. The escrow account shall provide that funds deposited therein may\nbe withdrawn by the seller upon the completion of the proposed\nconstruction in the following manner: (i) one-third of the funds may be\ndistributed to the seller upon completion of one-half of the proposed\nconstruction; (ii) not more than two-thirds of the funds which have been\ndeposited in escrow may be released upon the completion of three-fourths\nof the proposed construction; (iii) the escrow agent may accept as\nevidence of partial completion certification of any architect or\nengineer licensed pursuant to the provisions of the education law that\nthe proposed construction has been completed in accordance with the\nplans and specifications.\n 6. The escrow account shall be released by the escrow agent to the\nseller not more than thirty days following full operation of the\nfacility and certification of completion from any architect or engineer\nlicensed pursuant to the provisions of the education law.\n 7. In lieu of the escrow provisions required by this section, the\nhealth club may furnish information as required by the secretary,\nexecuted under penalty of perjury by an officer or owner of the health\nclub which reasonably demonstrates financial responsibility that will\nenable the health club to satisfy the possible claims against the escrow\nrequired by this section. In the event the health club is controlled by,\nunder common control, or controls another corporation and the other\ncorporation agrees in writing to satisfy the claims against the escrow\nrequired by this section, then the financial responsibility of the other\ncorporation shall be considered in determining the applicability of this\nsection. In determining whether the health club has the requisite\nfinancial responsibility the secretary may consider the operating and\nbusiness history and reputation of the health club and its management\nwithin and without the state as well as the operating and business\nhistory and reputation of any business controlled by, under common\ncontrol with, or controlling the health club.\n