Introduced by Senator Campbell of Windsor District
Subject: Commerce and trade; construction trust fund
Statement of purpose: This bill proposes to protect the rights of subcontractors and material suppliers by requiring a general contractor or subcontractor who received money from an owner to hold the money in trust for the express purpose of paying the subcontractors or material suppliers. The bill creates personal liability on any officer, director, or employee of a contractor who retains or uses the money held in trust for any purpose other than to pay the subcontractors or material suppliers for whom the money was paid.
AN ACT RELATING TO CONSTRUCTION TRUST FUND
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 9 V.S.A. chapter 52 is added to read:
CHAPTER 52. CONSTRUCTION TRUST FUND
§ 2110. FUND HELD IN TRUST; COMMINGLING
(a) For the purposes of this chapter, “managing agent” means an employee of a contractor or subcontractor who is responsible for the direction over or control of money held in trust by the contractor or subcontractor under subsection (b) of this section.
(b)(1) Any moneys paid under a contract by an owner to a contractor or by the owner or contractor to a subcontractor for work done or materials furnished, or both, for or about a building by any subcontractor shall be held in trust by the contractor or subcontractor, as trustee, for those subcontractors who did work or furnished materials, or both, for or about the building, for purposes of paying those subcontractors.
(2) An officer, director, or managing agent of a contractor or subcontractor who has direction over or control of money held in trust by a contractor or subcontractor under subdivision (1) of this subsection is a trustee for the purpose of paying the money to the subcontractors who are entitled to it.
(c)(1) Nothing contained in this chapter shall be construed as requiring moneys held in trust by a contractor or subcontractor under subsection (b) of this section to be placed in a separate account.
§ 2111. FRAUDULENT RETENTION OF FUNDS; LIABILITY
(a) Any officer, director, or managing agent of any contractor or subcontractor, who knowingly retains or uses the moneys held in trust under section 2110 of this title, or any part thereof, for any purpose other than to pay those subcontractors for whom the moneys are held in trust, shall be personally liable to any person damaged by the action.
(b) This chapter does not apply to a contract for the construction and sale of a single family residential dwelling.
The Vermont General Assembly
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