New York Construction Trust Funds: Segregation and Control
New York contractors must keep project trust funds identifiable and properly documented. Dedicated Buildplus project accounts make that discipline easier.
This article provides general information, not legal advice. New York trust- fund obligations depend on the project, contracts, payments, and parties involved. Consult qualified New York counsel about your circumstances.
New York does not treat every dollar received by a contractor as ordinary working capital. Under Article 3-A of the Lien Law, funds received under or in connection with each construction contract generally become assets of a separate trust. The contractor is the trustee.
Those assets must be applied to permitted project costs, including claims from subcontractors, laborers, architects, engineers, surveyors, and material suppliers, along with specified taxes, benefits, insurance, and bond premiums. Using trust assets for another purpose before the trust claims are paid or discharged may constitute a diversion.
Does New York require a separate bank account?
Not always. Lien Law §75 expressly permits a trustee to hold funds from separate trusts in the same bank account if its books clearly allocate deposits and withdrawals to each trust.
But that permission is not a shortcut. The trustee must maintain records for each trust, including receivables, payables, funds received, payments made, the parties involved, dates, amounts, and enough detail to connect each transaction to a trust purpose. Failure to keep the required records can become presumptive evidence that trust funds were diverted.
In practice, the question is not simply whether money shares a bank account. It is whether the contractor can identify each trust's cash and prove where it went.
How Buildplus supports segregation
Buildplus gives a general contractor a dedicated account for each project plus a separate company operating account. The project accounts are opened in the contractor's business name, so the GC retains control without placing an outside fund-control company between the project and routine payments.
That structure supports Article 3-A discipline in three practical ways:
- Project funds stay identifiable. Receipts land in the account assigned to that project instead of disappearing into a pooled operating balance.
- Payments stay connected to the work. Transactions can be tied to the project's budget, expenses, invoices, payments, and subcontracts.
- The record remains reviewable. A project-level ledger and role-based access make it easier to trace what came in, what went out, and why.
Although §75 may allow pooled banking with sufficiently detailed books, dedicated project accounts reduce the accounting burden and the risk of one project quietly funding another. They turn legal allocation into visible daily practice.
What is Buildplus?
Buildplus is the payments, expenses and invoicing platform built for contractors running cost-plus jobs. Every payment, swipe and reimbursable expense stays tied to the project it belongs to.
Buildplus supports compliance; the contractor owns it
Buildplus does not decide whether a receipt is a trust asset or whether a payment is legally permitted. It also does not replace every contract, address, or supporting record required by law. The contractor remains the trustee and must classify transactions correctly, preserve complete documentation, and use funds only for lawful trust purposes.
Buildplus supplies the financial structure: separate project accounts, project-linked records, and an auditable transaction history. For a New York GC, that makes responsible fund segregation easier to operate and easier to show.