§ 71 — Purpose of the trust; "trust claims"; "beneficiaries

New York § 71

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

Text

§ 71. Purpose of the trust; "trust claims"; "beneficiaries." 1. The\ntrust assets of which an owner is trustee under subdivisions five (a) to\nfive (f), inclusive, of section seventy of this chapter shall be held\nand applied for payment of the cost of improvement. The trust assets of\nwhich an owner is trustee under subdivision five (g) of section seventy\nof this chapter shall be held and applied for payment of the cost of\nimprovement and, in addition, for the purposes of the further trust\nprovided in section seventy-one-a of this chapter.\n 2. The trust assets of which a contractor or subcontractor is trustee\nshall be held and applied for the following expenditures arising out of\nthe improvement of real property, including home improvement or public\nimprovement and incurred in the performance of his contract or\nsubcontract, as the case may be:\n (a) payment of claims of subcontractors, architects, engineers,\nsurveyors, laborers and materialmen;\n (b) payment of the amount of taxes based on payrolls including such\npersons and withheld or required to be withheld and taxes based on the\npurchase price or value of materials or equipment required to be\ninstalled or furnished in connection with the performance of the\nimprovement;\n (c) payment of taxes and unemployment insurance and other\ncontributions due by reason of the employment out of which such claims\narose;\n (d) payment of any benefits or wage supplements, or the amounts\nnecessary to provide such benefits or furnish such supplements, to the\nextent that the trustee, as employer, is obligated to pay or provide\nsuch benefits or furnish such supplements by any agreement to which he\nis a party;\n (e) payment of premiums on a surety bond or bonds filed and premiums\non insurance accrued during the making of the improvement, including\nhome improvement, or public improvement;\n (f) payment to which the owner is entitled pursuant to the provisions\nof section seventy-one-a of this chapter.\n 3. (a) With respect to the trust of which an owner is trustee, "trust\nclaims" means claims of contractors, subcontractors, architects,\nengineers, surveyors, laborers and materialmen arising out of the\nimprovement, for which the owner is obligated, and also means any\nobligation of the owner incurred in connection with the improvement for\na payment or expenditure defined as cost of improvement.\n (b) With respect to the trusts of which a contractor or subcontractor\nis trustee, "trust claims" means claims arising at any time for payments\nfor which the trustee is authorized to use trust funds as provided in\nsubdivision two of this section.\n (c) No claim acquired by the trustee by assignment or otherwise shall\nbe a trust claim after it has been so acquired.\n 4. Persons having claims for payment of amounts for which the trustee\nis authorized to use trust assets as provided in this section are\nbeneficiaries of the trust whether or not they have filed or had the\nright to file a notice of lien as provided in article two of this\nchapter or shall have recovered a judgment therefor. Where an owner\nbecomes obligated to incur an expenditure as part of the cost of\nimprovement, any person to whom he is so obligated is a beneficiary.\n 5. For the purposes of this article, every trust claim shall be deemed\nto be in existence from the time of the making of the contract or the\noccurrence of the transaction out of which the claim arises and, except\nas provided in section seventy-six and section seventy-seven, the rights\nof each member of the class of beneficiaries accrue at the making of the\ncontract or the occurrence of the transaction out of which the claim\narises.\n