§4005a. Fund held in trust; commingling; no effect on title to real property

Link to law: http://legislature.vermont.gov/statutes/section/09/102/04005a
Published: 2015

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The Vermont Statutes Online



Title

09

:
Commerce and Trade






Chapter

102

:
CONSTRUCTION CONTRACTS











 

§

4005a. Fund held in trust; commingling; no effect on title to real property

(a) As used in

this section:

(1)

"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.

(2)

"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,

or renovation.

(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.

(f) Nothing

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.)
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