N.Y. Lien Law § 77 (2026)

§ 77. Action to enforce trust. 1. A trust arising under this article
may be enforced by the holder of any trust claim, including any person
subrogated to the right of a beneficiary of the trust holding a trust
claim, in a representative action brought for the benefit of all
beneficiaries of the trust. An action to enforce the trust may also be
maintained by the trustee. In any such action, except as otherwise
provided in this article, the practice, pleadings, forms and procedure
shall conform as nearly as may be to the practice, pleadings, forms and
procedure in a class action as provided in article nine of the civil
practice law and rules; provided, however, that in determining whether
the prerequisites of a class action have been satisfied, the provisions
of paragraph one of subdivision (a) of section nine hundred one of such
law and rules may be waived at the discretion of the court.
  2. Such action may be maintained at any time during the improvement of
real property, or home improvement, or public improvement and successive
actions may be maintained from time to time during the improvement
provided no other such action is pending at the time of the commencement
thereof. No such action shall be maintainable if commenced more than one
year after the completion of such improvement or, in the case of
subcontractors or materialmen, after the expiration of one year from the
date on which final payment under the claimant's contract became due,
whichever is later, except an action by the trustee for final settlement
of his accounts and for his discharge.
  3. (a) The relief granted in any such action may include any or all of
the following:
  (i) Relief to compel an interim or final accounting by the trustee; to
identify and recover trust assets in the hands of any person together
with interest accrued thereon from the time of the diversion. Interest
shall be computed at the rate equal to the underpayment rate set by the
commissioner of taxation and finance pursuant to subsection (e) of
section one thousand ninety-six of the tax law, minus four percentage
points; to set aside as a diversion any unauthorized payment, assignment
or other transfer, whether voluntary or involuntary; to enjoin a
diversion; to recover damages for breach of trust or participation
therein;
  (ii) Enforcement on behalf of the trust of any right of action
constituting a trust asset;
  (iii) Determination of the existence and amount of any trust asset or
of any trust claim;
  (iv) An order terminating or limiting the authority of the trustee in
the application of trust assets or of any trust asset, or directing the
time and manner of application of a trust asset or part thereof;
  (v) An order requiring the trustee to give security to ensure the
proper distribution of the trust assets, either during the pendency of
the action or thereafter, or to furnish assurance therefor in any other
manner, if it appears that there is danger that such assets or asset
will be dissipated before judgment or diverted from trust purposes;
  (vi) An order for distribution of any trust assets available for
distribution, either with respect to the entire trust or with respect to
particular assets of the trust, or for retention of particular assets
for future distribution. Where the holder of any trust assets is a
trustee or a transferee who received the assets with the knowledge that
they were trust funds, an order for distribution and retention for
future distribution of any trust assets shall include the amount of
diverted funds plus interest from the time of the diversion to the date
of such order;
  (vii) Settlement of the interim or final account of the trustee;
  (viii) Final discharge of the trustee at the termination of the trust,
or discharge of the trustee with respect to the application of specific
trust assets;
  (ix) Such other and further relief as to the court may seem necessary
and proper;
  (x) Any provisional or ancillary relief incident to any of such
relief.
  (b) Any relief pursuant to subparagraphs (i), (ii), (iii), (iv), (v),
(ix), or (x) of paragraph (a) shall be deemed to be for the benefit of
the entire class of trust beneficiaries, including persons who may
become trust beneficiaries at any time before the termination of the
trust. Except as provided in subdivision four of this section, relief
pursuant to subparagraph (vi) shall also be deemed to be for the benefit
of such entire class, but unless the court shall otherwise direct, only
those persons shall be entitled to share in any distribution of the
trust assets who are trust beneficiaries at the time of entry of the
judgment under which distribution is to be made and who have appeared in
the action or filed their claims in such manner and within such time as
the court shall direct, and whose claims are due and payable at the date
for distribution as set by the order of the court and either are
undisputed by the trustee or have been determined in the action.
  4. If an action to enforce a trust of which the owner is trustee is
commenced before the completion or abandonment of the improvement of
real property, or home improvement, or if an action to enforce a trust
of which a contractor or subcontractor is trustee is commenced before
the completion or abandonment of the performance by the trustee under
the contract or subcontract, the judgment therein may provide for
distribution of the assets then available for distribution among trust
beneficiaries whose claims are then payable, and who have appeared in
the action or who file their claims within such time as the court shall
direct, and the judgment shall so provide unless the court shall
determine that in the circumstances equity requires that distribution be
deferred to await maturity of other trust claims.
  5. If the action to enforce a trust of which a contractor or
subcontractor is trustee is brought after the completion or abandonment
of the performance of the contract or subcontract but before the
completion of the improvement the court may direct that the action be
continued to await events by reason of which additional trust assets may
become available.
  6. For the purposes of any distribution of trust assets, the court may
direct that trust claims shown upon a schedule or schedules filed by the
trustee shall be deemed to have been filed in the action.
  7. An action brought under this article shall not be compromised or
discontinued nor dismissed by consent, by default or for failure to
prosecute, except with the approval of the court. On any application for
such approval notice shall be given in such manner as the court shall
direct.
  8. Subject to subdivisions three and four of this section, in any
distribution of trust assets pursuant to order or judgment in an action
to enforce a trust, the following classes of trust claims shall have
preference, in the order named: (a) trust claims for taxes and for
unemployment insurance and other contributions, due by reason of
employments, and for amounts of taxes withheld or required to be
withheld; (b) trust claims of laborers for daily or weekly wages; (c)
trust claims for benefits and wage supplements; (d) claims for any
amounts of wages of laborers for daily or weekly wages (other than
claims for amounts of taxes deducted and withheld, constituting trust
claims for such amounts) actually deducted from payments thereof,
pursuant to law or agreement, for remittance to any person on behalf of
the laborer or in satisfaction of his obligation, to the extent that
such person is entitled to assert, as a trust claim, the claim the
laborer would otherwise have for such amount.
  Except as provided in this subdivision, trust claims entitled to share
in any distribution of trust assets pursuant to order of the court shall
share pro rata.