|BILL AS PASSED BY SENATE||2007-2008|
AN ACT RELATING TO ESTABLISHING A CONSTRUCTION TRUST FUND
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 9 V.S.A. § 4005a is added to read:
§ 4005a. FUND HELD IN TRUST; COMMINGLING; NO EFFECT ON
TITLE TO REAL PROPERTY
(a) For the purposes of 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 Title 9 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.
The Vermont General Assembly
115 State Street