The Vermont Statutes Online
Commerce and Trade
4005a. Fund held in trust; commingling; no effect on title to real property
(a) As used in
"Claim" means any valid claim for materials furnished or services
rendered in the construction, repair, remodeling, improvement, or renovation of
any building or structure for which the claimant has a lien or the right to
claim a lien.
"Express trust" means funds that have been paid by an owner, for or
in connection with services, labor, or materials used in an improvement of real
property, which are to be held by a contractor or subcontractor, in express
trust, for those services, labor, or materials. Any such contractor or
subcontractor who accepts money from any owner or contractor shall become the
trustee of the express trust that is created pursuant to this section. The
amounts received by such contractor or subcontractor under or in connection
with each building project shall be a separate trust and the contractor or
subcontractor, or any successor or assign or both of such contractor or subcontractor
that hold such trust funds, shall be a trustee thereof. These funds are not
required to be held in any separate account by a contractor or subcontractor.
Such trust shall be effective against and shall have priority over any
unsecured interest of a party seeking payment from such contractor or
subcontractor for claims other than those that are due and owing by reason of
the specific building project for which the trust was created, whether such
creditors are foreign attachment or other judicial lien creditors, a trustee in
bankruptcy, or similar creditors or representatives or creditors of the
contractor or subcontractor.
(b) Funds held
in express trust are not required to be held in any separate account by a
contractor or subcontractor.
(c) No express
trust shall be required for a federal, State, or municipal project.
(d) The amount
payable to any contractor or subcontractor under any contract for the
construction, repair, remodeling, improvement, or renovation of any building or
structure shall, upon receipt by such contractor or subcontractor, be held in
express trust by such contractor or subcontractor for the payment of all claims
that are due and owing, or to become due and owing, by such contractor or
subcontractor by reason of such construction, repair, remodeling, improvement,
(e) Any amount
required to be held in express trust under this section shall be applied to the
payment of the corresponding claims specified in this section.
herein shall be construed to create a lien on real property. The existence of
an express trust under this section shall not prohibit the filing or
enforcement of a lien against the affected real property pursuant to chapter 51
of this title by any claimant. A priority lien of a secured lender shall not be
subordinate to an express trust.
(g) In the case
of an express trust which is not held by a corporation, limited liability
partnership, or limited liability company, liability for sums due under this
section shall only attach to the principal or head of the company which holds
the funds under the express trust. (Added 2007, No. 211 (Adj. Sess.), § 2.)