Legal Question in Construction Law in New Mexico

Re: Custom Home Construction

It's not so much a matter of "illegal" as it is a question of who owns the interest earned. The usual rule is, whoever receives the escrowed principal also receives the interest. So if he has to give back the escrow, it comes with the interest. Usually, the interest is considered part of the escrow, too, so it should be left on deposit. But this is really small potatoes.

This is not like the case where he takes the money out of the bank, goes to a casino where he "has a system" that really does work. He puts the money back the next day. Legally, such an irresponsible person has to cough up his ill-gotten gains as a matter of equity. It's called restitution.

So the interest on the escrow is not much of an issue, legally, unless there is something else going on that has you concerned. You might want to talk to an attorney about your concerns.

By the way, the address in the footer is where I spend half my time; the other half of the time I am at my little ranch just outside Santa Fe in the foothills of the Sangres. :-)