Legislation

* § 680-a. Definitions. As used in this article, the following terms
shall have the following meanings:

1. "Account agreement" means an agreement that:

(a) is in a record between a bank and one or more depositors;

(b) may have one or more beneficiaries as additional parties; and

(c) states the intention of the parties to establish a special deposit
governed by this article.

2. "Bank" means a person engaged in the business of banking and
includes a savings bank, savings and loan association, credit union,
trust company, and a bank as defined in section two of this chapter.
Each branch or separate office of a bank is a separate bank for the
purpose of this article.

3. "Beneficiary" means a person that:

(a) is identified as a beneficiary in an account agreement; or

(b) if not identified as a beneficiary in an account agreement, may be
entitled to payment from a special deposit:

(i) under the account agreement; or

(ii) on termination of the special deposit.

4. "Contingency" means an event or circumstance stated in an account
agreement that is not certain to occur but must occur before the bank is
obligated to pay a beneficiary.

5. "Creditor process" means attachment, garnishment, levy, notice of
lien, sequestration, or similar process issued by or on behalf of a
creditor or other claimant.

6. "Depositor" means a person that establishes or funds a special
deposit.

7. "Good faith" means honesty in fact and observance of reasonable
commercial standards of fair dealing.

8. "Knowledge" means:

(a) with respect to a beneficiary, actual knowledge of the fact; or

(b) with respect to a bank holding a special deposit:

(i) if the bank:

(1) has established a reasonable routine for communicating material
information to an individual to whom the bank has assigned
responsibility for the special deposit; and

(2) maintains reasonable compliance with the routine, actual knowledge
of the fact by that individual; or

(ii) if the bank has not established and maintained reasonable
compliance with a routine described in subparagraph (i) of this
paragraph or otherwise exercised due diligence, implied knowledge of the
fact that would have come to the attention of an individual to whom the
bank has assigned responsibility for the special deposit.

9. "Obligated to pay a beneficiary" or "obligation to pay a
beneficiary" means a beneficiary is entitled under the account agreement
to receive from the bank a payment when:

(a) a contingency has occurred; and

(b) the bank has knowledge the contingency has occurred.

10. "Permissible purpose" means a governmental, regulatory,
commercial, charitable, or testamentary objective of the parties stated
in an account agreement. The term includes an objective to:

(a) hold funds:

(i) in escrow, including for a purchase and sale, lease, buyback, or
other transaction;

(ii) as a security deposit of a tenant;

(iii) that may be distributed to a person as remuneration, retirement
or other benefit, or compensation under a judgment, consent decree,
court order, or other decision of a tribunal; or

(iv) for distribution to a defined class of persons after
identification of the class members and their interest in the funds;

(b) provide assurance with respect to an obligation created by
contract, such as earnest money to ensure a transaction closes;

(c) settle an obligation that arises in the operation of a payment
system, securities settlement system, or other financial market
infrastructure;

(d) provide assurance with respect to an obligation that arises in the
operation of a payment system, securities settlement system, or other
financial market infrastructure; or

(e) hold margin, other cash collateral, or funds that support the
orderly functioning of financial market infrastructure or the
performance of an obligation with respect to the infrastructure.

11. "Person" means an individual, estate, business or nonprofit
entity, government or governmental subdivision, agency, or
instrumentality, or other legal entity. The term includes a protected
series, however denominated, of an entity if the protected series is
established under law that limits, or limits if conditions specified
under law are satisfied, the ability of a creditor of the entity or of
any other protected series of the entity to satisfy a claim from assets
of the protected series.

12. "Record" means information:

(a) inscribed on a tangible medium; or

(b) stored in an electronic or other medium and retrievable in
perceivable form.

13. "Special deposit" means a deposit that satisfies section six
hundred eighty-d of this article.

14. "State" means a state of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands, or any other
territory or possession subject to the jurisdiction of the United
States. The term includes an agency or instrumentality of the state.

* NB Effective January 1, 2026