2006 New York Code - Escrow Required.

 
    §  622. Escrow required. All moneys received by a seller pursuant to a
  contract for services for use by a buyer of a health club prior  to  the
  full operation of such health club shall be placed in escrow.
    1.  Such funds shall be kept and maintained in an account separate and
  apart from any account maintained by or for the seller's personal use or
  for use in the construction or operation of the health club or  for  the
  payment or benefit of employees of the seller.
    2.  The escrow account shall be established in a bank or trust company
  doing business in this state.
    3. The escrow account shall provide that the purpose of the account is
  to protect the consumer in the event that the seller fails  to  complete
  substantially  and  to  open  the  facility  within  one  year following
  establishment of the account.   Any buyer who  has  advanced  moneys  on
  deposit  in  the  escrow  account  may  maintain a representative action
  pursuant to the provisions of the civil practice law and rules to  close
  the  account and to release such moneys pro-rata to all buyers similarly
  situated if  such  health  club  facility  has  not  been  substantially
  completed  and opened within one year of establishment of the account or
  if the buyer has not had the full use of another similar facility during
  this period.
    4. Within three  business  days  of  a  request  therefor,  a  monthly
  statement of the escrow account is to be furnished to consumers who have
  advanced funds or obligation until such account is no longer required by
  this article.
    5.  The  escrow account shall provide that funds deposited therein may
  be  withdrawn  by  the  seller  upon  the  completion  of  the  proposed
  construction  in the following manner: (i) one-third of the funds may be
  distributed to the seller upon completion of one-half  of  the  proposed
  construction; (ii) not more than two-thirds of the funds which have been
  deposited in escrow may be released upon the completion of three-fourths
  of  the  proposed  construction;  (iii)  the  escrow agent may accept as
  evidence  of  partial  completion  certification  of  any  architect  or
  engineer  licensed  pursuant to the provisions of the education law that
  the proposed construction has been  completed  in  accordance  with  the
  plans and specifications.
    6.  The  escrow  account  shall be released by the escrow agent to the
  seller not more  than  thirty  days  following  full  operation  of  the
  facility  and certification of completion from any architect or engineer
  licensed pursuant to the provisions of the education law.
    7. In lieu of the escrow provisions  required  by  this  section,  the
  health  club  may  furnish  information  as  required  by the secretary,
  executed under penalty of perjury by an officer or owner of  the  health
  club  which  reasonably  demonstrates financial responsibility that will
  enable the health club to satisfy the possible claims against the escrow
  required by this section. In the event the health club is controlled by,
  under common control, or controls  another  corporation  and  the  other
  corporation  agrees  in writing to satisfy the claims against the escrow
  required by this section, then the financial responsibility of the other
  corporation shall be considered in determining the applicability of this
  section. In determining  whether  the  health  club  has  the  requisite
  financial  responsibility  the  secretary may consider the operating and
  business history and reputation of the health club  and  its  management
  within  and  without  the  state  as  well as the operating and business
  history and reputation of  any  business  controlled  by,  under  common
  control with, or controlling the health club.