NY Lien L § 73 (2021)
2021 New York Laws LIE - Lien Article 3-A - Definition and Enforcement of Trusts 73 - Affirmative Defense in Action Against Transferee of Trust Assets or to Charge Trustee in Certain Cases; "Notice of lending."

§ 73. Affirmative defense in action against transferee of trust assets or  to  charge  trustee in certain cases; "Notice of Lending." 1. In any action against a person to whom trust assets have been  transferred,  to recover  assets  diverted  from  the trust or to recover damages for the diversion, a transferee named in a "Notice of Lending" filed as provided in subdivision three of this section shall be entitled to show by way of defense that the transfer was made as security for or  in  consideration of  or  in  repayment of advances made to or on behalf of the trustee in accordance with such notice of lending and that prior to the  making  of such  advances  the  transferee  procured  from  the trustee the written agreement of the trustee that he will receive the advances and will hold the right to receive such advances as trust funds to be first applied to the payment of trust claims as defined in section  seventy-one  of  this chapter,  and  that he will apply the same to such payments only, before using any part of such  advances  for  any  other  purpose.  Subject  to subdivision  four  of  this section, if such defense is established, the transferee shall be entitled to a credit for the amount of the  advances with  respect  to  which  it  is so established, to the extent that such amount does not exceed the maximum amount specified  in  the  notice  of lending filed as provided in subdivision three.   2.  In any action in which it is sought to charge a trustee personally with liability by reason of a diversion of  trust  assets,  the  trustee shall  be  entitled  to  show  by  way  of  defense  that  the  transfer constituting the diversion was made to a transferee named in  a  "Notice of Lending" filed as provided in subdivision three and that the transfer was  made  as  security  for  or  in consideration of or in repayment of advances made to  him  as  trustee  or  on  his  behalf  as  trustee  in accordance  with  such  notice  of  lending, and that such advances were actually applied for a purpose of the trust as stated in subdivision one or subdivision two of section seventy-one of this  chapter.  Subject  to subdivision  four  of  this section, if such defense is established, the trustee shall be entitled to a credit against any personal liability  by reason  of such transfer, for the amount of the advances with respect to which it is established, to the extent that such amount does not  exceed the  maximum  amount  specified  in  the  notice  filed  as  provided in subdivision three.   3. (a) If funds are advanced to or on behalf of  a  trustee,  for  the purposes  of  the  trust, either the trustee or the person advancing the funds may file a "Notice of Lending" as provided in this subdivision. In the case of advances to an owner or to a contractor or subcontractor for one or more projects for the improvement of real  property  including  a home  improvement, the notice shall be filed in the office of the county clerk of each county where the real property improved or to be  improved to  which  the  notice  relates  is situated. Such clerk shall enter the facts relating to the notice in the "lien docket"  or  in  another  book provided  by  him for such purpose. Each such notice shall be indexed by the name of the trustee to whom or on  whose  behalf  the  advances  are made.  In  the case of advances to a contractor or subcontractor for one or more projects involving a public improvement,  the  notice  shall  be filed  with  the  head  of  each  department  or bureau having charge of construction of an improvement to which the notice relates and with  the financial  officer of each public corporation or other officer or person charged with  the  custody  and  disbursement  of  the  corporate  funds applicable to the contract for each such public improvement.  (b)  A  notice  filed  pursuant  to  this section is effective for the purposes of this section with respect to advances made  on  the  day  of filing  or subsequently, or made not more than five days before the date of filing. The notice must contain: (1) a  statement  of  the  name  and  address  of  the person making the advances, (2) a statement of the name and address of the person to whom or on whose behalf they are made,  and whether  he  is  owner,  contractor or subcontractor, (3) in the case of advances  relating  to  one specific project for the improvement of real property  including  a  home  improvement   or   one   specific   public improvement,  a  description,  sufficient  for  identification,  of  the improvement and of the real property involved for which the advances are made, and in the case of a notice of  lending  relating  to  several  or undetermined  projects  for the improvement of real property including a home improvement or for public improvements, a statement of each  county wherein  the  real  property  is or may be situated, (4) the date of any advance made on or before the date of filing for  which  the  notice  is intended  to  be  effective,  (5)  in  the  case  of a notice of lending relating to several or undetermined projects, the date the  notice  will terminate, which termination date shall not be more than two years after the  date  the  notice is filed, and (6) the maximum balance of advances outstanding to be permitted by the lender pursuant  to  the  notice.  If real  property  is required to be specifically identified hereunder, the identification shall be sufficient if it includes the name of the record owner and the location of the real estate by street and number and  town or  city  or,  if the real estate is in the city of New York, by county, except that if the real estate is in the city of New York or counties of Nassau or Onondaga, where the block system of recording  or  registering and  indexing  conveyances  is  in use, the notice must also specify the block in which the real estate is situated.  (c) A "Notice of Lending" may be continued in effect for advances made beyond the stated termination date by filing within sixty days prior  to the  termination  date  a  subsequent  notice entitled "Second Notice of Lending" or "Third Notice of Lending", which identifies the prior notice to which it relates  and  otherwise  conforms  to  the  requirements  of paragraph  (b) of subdivision three of this section. The term "Notice of Lending" as used in this section includes  any  amendments  but  if  any amendment  increases  the  maximum balance of advances outstanding to be permitted by the lender, it is effective as to the increased amount only with respect to advances made not more than five days before the date of filing the amended notice or thereafter.  (d) A "Notice of Assignment" meeting the requirements  of  subdivision two of section fifteen of this chapter and filed pursuant to subdivision one  of  said  section  shall  be  deemed  for all purposes a "Notice of Lending" complying with the requirements of this section.   4. Notwithstanding that the transferee, or the trustee, establishes  a defense  as  provided  in  subdivision  one  or  subdivision two of this section, he shall be allowed no credit by reason of such defense  if  it is  shown  that  a  written demand by a trust beneficiary for a verified statement of the amount of advances actually made  to  the  trustee  was served  personally or by registered or certified mail on the transferee, or the trustee as the  case  may  be,  and  that  he  failed  to  comply therewith within ten days after receipt of the demand, provided, that if either the transferee or the trustee complies with a demand so served on him, such compliance shall be sufficient as to the other.   5.  Notwithstanding  any provision of this chapter or of any other law to the contrary, moneys received pursuant to a notice of lending  by  an owner, contractor or subcontractor shall be deemed to be trust assets.