Contract of Indemnity

A contract of indemnity is a written agreement where the contractor personally guarantees the return or proper use of the homeowner’s payments. Instead of holding the money in escrow, the contractor promises—legally and financially—to reimburse the homeowner if the funds are misused or if the contractor fails to perform.

NYC allows a contract of indemnity as an alternative to both escrow and a surety bond, but the responsibility rests squarely on the contractor. If something goes wrong, the contractor is directly liable for making the homeowner whole.