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Article 3-A Trustee Required to Produce Original Documents

Bette & Cring, LLC v. Brandle Meadows, LLC 2010 WL 5187706 (Sup Ct, Dec 3, 2010)

The contractor sought an order under Art 3-A directing the owner to allow an examination of its trust books or records. The dispute was over the scope of examination. The contractor argued that it had a right to see all of the owner’s documentation underlying each trust transaction.

In ruiling in favor of the contractor, the court stated the law on this issue as follows:

“Under Lien Law Sec 75, a trustee is obligated to maintain ‘books or records’ including entries for the following categories: trust assets received, trust accounts payable, trust funds received, trust payments made with trust assets and transfers in payment of or to secure advances made pursuant to a ‘Notice of Lending’.

“Each category requires specific information identifying the transaction. These are the books or records a beneficiary is entitled to examine under Lien Law Sec 76.

“In the event the required information is detailed in the books provided for examination, a further examination of the underlying documentation does not appear to be required.

“Where the books fail to detail the required information, however, a beneficiary is entitled to examine the underlying documentation in order to obtain same, i.e. the records.”

In this case, there was a question as to whether all the required information had been provided to the contractor. As a result the court ordered the owner to produce the information outlined in Lien Law Sec 75 as demanded by the contractor.

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