Legal Question in Construction Law in New York

builder's escrow

I had a contract with a builder to build a home. He put $25,000 of my deposit into a ''builder's escrow'' from which he draws salaries for his carpenters and building supplies. I was forced to break the contract as the seller of the land broke our contract to purchase the land. I asked the builder for my money back so that I could use it to purchase another parcel of land. He returned only a portion of my money. He kept $1,000 for ''office and management'' fees, He told me that he was ''negotiating'' to get my other $5,000 back. My deposit was to ''lock in'' the contract, not to begin construction. I believe that an escrow account built with my money is for use in constructing my home, not put into a pool with 4 or 5 other purchasers. Also, I believ that withholding my funds is considered ''Grand Larceny'' according to New York statutes.


Asked on 3/19/07, 10:44 pm

1 Answer from Attorneys
Kevin Connolly Kevin J. Connolly

Re: builder's escrow

It depends. First, what does your contract say about the escrow? Second, has your town or county adopted Article 37 of the General Business Law? (It's an opt-in statute and until adopted by Local Law, it has no effect.)

If the contract permits the builder to use the money and Article 37 has not been adopted, you simply have to sue. I am a little surprised that you spend money to improve the property before you owned it. You have a right to impose a lien on the land for the money you put out with the Owner's knowledge, but it alsready sounds as if you have unwound the sale contract...which may have been a mistake, too.

Break the chain of mistakes and hire an attorney immediately.

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Answered on 3/20/07, 9:53 am


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