§ 70 — Definition of trusts

New York § 70

• Jurisdiction: New York
• Law LIE: Lien
• Art. 3-A: Definition and Enforcement of Trusts

Text

§ 70. Definition of trusts. 1. The funds described in this section\nreceived by an owner for or in connection with an improvement of real\nproperty in this state, including a home improvement loan, or received\nby a contractor under or in connection with a contract for an\nimprovement of real property, or home improvement, or a contract for a\npublic improvement in this state, or received by a subcontractor under\nor in connection with a subcontract made with the contractor for such\nimprovement of real property including a home improvement contract or\npublic improvement or made with any subcontractor under any such\ncontract, and any right of action for any such funds due or earned or to\nbecome due or earned, shall constitute assets of a trust for the\npurposes provided in section seventy-one of this chapter.\n For the purposes of this section: (a) any right to receive payment at\na future time shall be deemed a right of action therefor and an asset of\nthe trust even though it is contingent upon performance or upon some\nother event, but the fact that the right is a trust asset does not\nenlarge the right or excuse any performance or condition upon which it\ndepends; (b) "contract" and "subcontract" shall include any modification\nof the contract or subcontract to which reference is made; and (c) funds\ndue or earned under a contract or subcontract shall include any funds\npayable to the contractor or subcontractor in addition to the contract\nprice by reason of any transaction, event or circumstance in the making\nor in the performance of the contract or subcontract.\n 2. The funds received by an owner and the rights of action with\nrespect thereto, for or in connection with each improvement, shall be a\nseparate trust and the owner shall be the trustee thereof. The funds\nreceived by a contractor or subcontractor and the rights of action with\nrespect thereto, under or in connection with each contract or\nsubcontract, shall be a separate trust and the contractor or\nsubcontractor shall be the trustee thereof.\n 3. Every such trust shall commence at the time when any asset thereof\ncomes into existence, whether or not there shall be at that time any\nbeneficiary of the trust. The trust of which the owner is trustee shall\ncontinue with respect to every asset of the trust until every trust\nclaim arising at any time during the improvement has been paid or\ndischarged, or until all such assets have been applied for the purposes\nof the trust. The trust of which a contractor or subcontractor is\ntrustee shall continue with respect to every asset of the trust until\nevery trust claim arising at any time prior to the completion of the\ncontract or subcontract has been paid or discharged, or until all such\nassets have been applied for the purposes of the trust. Upon termination\nof the trust by payment or discharge of all the trust claims, the\nbeneficial interest in any remaining assets shall vest in the owner,\ncontractor or subcontractor, as the case may be.\n 4. The trusts described in this section shall arise whether or not a\ncovenant declaring or acknowledging the trust, as required in article\ntwo of this chapter, has been executed.\n 5. The assets of the trust of which the owner is trustee are the funds\nreceived by him and his rights of action for payment thereof\n (a) under a building loan contract;\n (b) under a building loan mortgage or a home improvement loan;\n (c) under a mortgage recorded subsequent to the commencement of the\nimprovement and before the expiration of four months after completion of\nthe improvement;\n (d) as consideration for a conveyance recorded subsequent to the\ncommencement of the improvement and before the expiration of four months\nafter the completion thereof;\n (e) as consideration for, or advances secured by, an assignment of\nrents due or to become due under an existing or future lease or tenancy\nof the premises that are the subject of the improvement, or of any part\nof such premises, if the assignment is executed subsequent to the\ncommencement of the improvement and before the expiration of four months\nafter the completion of the improvement or if it is executed before the\ncommencement of the improvement and an express promise to make an\nimprovement, or an express representation that an improvement will be\nmade, is contained in the assignment or given in the transaction in\nwhich the assignment is made;\n (f) as proceeds of any insurance payable because of the destruction of\nthe improvement or its removal by fire or other casualty, except that\nthe amount thereof required to reimburse the owner for premiums paid by\nhim out of funds other than trust funds shall not be deemed part of the\ntrust assets;\n (g) under an executory contract for the sale of real property and the\nimprovement thereof by the construction of a building thereon.\n 6. The assets of the trust of which a contractor is trustee are the\nfunds received by him and his rights of action for payment thereof\n (a) under the contract for the improvement of real property, or home\nimprovement or the public improvement;\n (b) under an assignment of funds due or earned or to become due or\nearned under the contract;\n (c) as proceeds of any insurance payable because of destruction of the\nimprovement of real property including a home improvement or public\nimprovement or its removal by fire or other casualty, except that the\namount thereof required to reimburse the contractor for premiums paid by\nhim out of funds other than trust funds shall not be deemed part of the\ntrust assets.\n 7. The assets of the trust of which a subcontractor is trustee are the\nfunds received by him and his rights of action for payment thereof\n (a) under the subcontract;\n (b) under an assignment or order for the payment of moneys due or\nearned or to become due or earned under the subcontract;\n (c) as proceeds of any insurance payable because of the destruction of\nthe improvement of real property or public improvement or its removal by\nfire or other casualty, except that the amount thereof required to\nreimburse the subcontractor for premiums paid by him out of funds other\nthan trust funds shall not be deemed part of the trust assets.\n 8. For the purposes of this article, the term "home improvement\ncontract" shall have the meaning ascribed to it by section seven hundred\nseventy of the general business law, and the term "home improvement\nloan" shall mean any loan obtained for the purpose of financing a home\nimprovement. The term "home improvement" shall mean the repairing,\nremodeling, altering, converting, or modernizing of, or adding to\nresidential property, including but not limited to the construction,\nerection, replacement, or improvement of driveways, swimming pools,\nsiding, insulation, roofing and windows, terraces, patios, landscaping,\nfences, porches, garages, solar energy systems, flooring, basements, and\nother improvements of the residential property and all structures or\nland adjacent to it.\n