KRS § 371.160 Deposit in escrow of amount held back by owner in contract involving improvement of real estate.
AI-assisted research summary: For qualifying real-estate-improvement contracts, retained amounts must be put into a separate escrow account, and the escrowed funds are later paid to the contractor after satisfactory completion and written release.
371.160 Deposit in escrow of amount held back by owner in contract involving improvement of real estate. Except as provided in KRS 367.620 to 367.628: (1) If, in any contract in the amount of two million dollars ($2,000,000) or more involving the improvement of real estate, a certain amount or percentage of the contract is held back by the owner, that retained amount shall be deposited in a separate escrow account with a bank or trust company authorized to do business in the Commonwealth of Kentucky; (2) As of the time of the deposit of the retained funds, they shall become the sole and separate property of the contractor to whom they are owed; (3) The escrow agent shall promptly invest all escrowed principal in obligations selected by the escrow agent in its discretion; (4) Upon satisfactory completion of the contract, to be evidenced by a written release by the owner, all funds accumulated in the escrow account, together with any interest thereon, shall be paid immediately to the contractor to whom it is owed; (5) The escrow agent shall be compensated for its services in an amount agreed to by the owner, contractor, and escrow agent. The compensation shall be a commercially reasonable fee commensurate with fees being charged for handling of escrow accounts of similar size and duration. The compensation shall be paid from the escrow account; (6) In the event the owner fails or refuses to execute the release provided for in subsection (4) of this section, then the contractor shall have a cause of action against the owner in a court of proper jurisdiction; and (7) This section shall not apply to contracts with the Commonwealth, any city, county, charter county government, urban-county government, unified local government, or consolidated local government, any other political subdivision, agency, or instrumentality of the Commonwealth, or school boards. Effective: June 27, 2025 History: Amended 2025 Ky. Acts ch. 15, sec. 8, effective June 27, 2025; and ch. 156, sec. 1, effective June 27, 2025. -- Amended 1998 Ky. Acts ch. 340, sec. 2, effective July 15, 1998. -- Created 1990 Ky. Acts ch. 506, sec. 1, effective July 13, 1990. Legislative Research Commission Note (6/27/2025). 2025 Ky. Acts ch. 15, sec. 10, provides that the amendments to this statute in that Act shall apply to contracts entered on or after June 27, 2025. Legislative Research Commission Note (6/27/2025). This statute was amended by 2025 Ky. Acts chs. 15 and 156, which do not appear to be in conflict and have been codified together.