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.

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 section four hundred ninety-seven 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.