Revision: Jan. 3, 2011, midnight
HB 107 – AS INTRODUCED
HOUSE BILL 107
This bill requires contractors and subcontractors to hold certain moneys received for payment of building materials and services in an express trust.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [
in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT relative to the creation of express trusts for payment of claims for materials and services in building projects.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Section; Liens for Labor and Materials; Express Trusts. Amend RSA 447 by inserting after section 14 the following new section:
447:14-a Express Trusts.
I. In this section:
(a) “Building project” means the construction, repair, remodeling, improvement, or renovation of any building or structure on real property.
(b) “Claim” means any valid claim for materials furnished or services rendered in connection with a building project for which the claimant has a lien or the right to claim a lien.
(c) “Express trust” means a trust created by operation of this section:
(1) Consisting of any amount that has been paid to a contractor or subcontractor in connection with a building project and the materials furnished or services rendered therefor; and
(2) The trustee of which is such contractor or subcontractor or any successor or assign of such contractor or subcontractor that holds such amounts.
II. An express trust is created pursuant to this section when a contractor or subcontractor receives any amount payable to such contractor or subcontractor under a contract for a building project. Such contractor or subcontractor shall be obligated to act in a fiduciary capacity and shall hold such amount in such express trust 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 building project. 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 of such contractor or subcontractor that holds such trust funds, shall be a trustee thereof. The contractor or subcontractor shall not be required to place any such amount received in a separate account. The express trust shall be effective against and shall have priority over any 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.
III. Any amount required to be held in an express trust under this section shall be applied to the payment of the claims specified in this section and no portion of such amount may be used for any other purpose until all such claims have been paid. The express trust, and the obligation of the contractor or subcontractor holding such amount, or any successor or assign of such contractor or subcontractor that holds such trust funds, to act in a fiduciary capacity under this section shall not terminate until all such claims have been paid.
IV. If the recipient of any amount required to be held in an express trust under this section is a business entity other than a natural person, such entity and the natural persons responsible for the management of such entity shall be responsible for the proper application of such amount under this section. This paragraph shall not apply to any agent or employee of such entity that is not responsible for the management of such entity.
V. The existence of an express trust under this section shall not prohibit the filing or enforcement of a lien against the affected real property by any claimant, and the filing of any such lien shall not release the holder of any amount required to be held in an express trust under this section from acting in a fiduciary capacity and carrying out the obligations created under this section.
VI. In any action or proceeding in which it is sought to apply trust assets for a purpose other than a purpose of the trust as stated in paragraph II:
(a) It shall be the duty of the trustee, if a party to the action or proceeding, to defend the trust against such application, and if the trustees knows of the action or proceeding but is not a party, to make application for intervention therein for the purpose of defending the trust; and
(b) Any beneficiary of the trust having a trust claim may intervene in the action or proceeding to defend the trust against such application.
2 Effective Date. This act shall take effect 60 days after its passage.None