N.Y. General Business Law 778-A – Contracts requiring down payments in escrow
§ 778-a. Contracts requiring down payments in escrow. 1. An escrow agent who undertakes to hold a buyer's down payment in the purchase and sale of a home shall have the fiduciary obligation to segregate and safeguard the buyer's down payment in a special bank account, and shall not commingle such down payment with the escrow agent's personal or business funds.
Terms Used In N.Y. General Business Law 778-A
- Bank: means a bank, trust company, savings bank, or state or federal savings and loan association which is located within this state. See N.Y. General Business Law 778
- Contract: means a written agreement between a seller and buyer for the sale and purchase of a home. See N.Y. General Business Law 778
- Contract: A legal written agreement that becomes binding when signed.
- Down payment: means a contract deposit or similar advance toward the purchase price of a home that a buyer gives to an escrow agent pursuant to the provisions of a contract. See N.Y. General Business Law 778
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Escrow agent: means a person, other than a seller, who holds a buyer's down payment deposit pursuant to the provisions of a contract. See N.Y. General Business Law 778
- Fiduciary: A trustee, executor, or administrator.
- Home: means an existing, previously occupied one or two-family dwelling intended to be used primarily as a residence, or a residential unit in a multi-unit structure in which title or shares of stock are transferred to buyers under a condominium or cooperative regime. See N.Y. General Business Law 778
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
2. A contract which requires that a down payment be held in escrow shall identify the escrow agent and the bank in which the down payment shall be deposited during the term of the escrow.
3. An escrow agent shall not be required to maintain a down payment in a bank account which is separate from all other bank accounts, provided the escrow agent's books of account and banking records shall accurately show the allocation to each owner of all funds that are deposited in the escrow agent's special bank account and all transactions relating to the receipt and disbursement of escrow funds.
4. Unless the contract provides otherwise, an escrow agent shall not be required to deposit the down payment in an interest-bearing bank account. If the escrow agent is an attorney admitted to practice in this state, a bank account authorized by § 497 of the judiciary law shall be a lawful depository for down payments held by the attorney in escrow.
5. The provisions of this section may be modified by a written agreement signed by the buyer, seller and escrow agent.
6. The provisions of this section are not exclusive and do not relieve a buyer, seller or escrow agent from compliance with all other applicable provisions of law, or from civil or criminal liability imposed by other applicable provisions of law.