.htaccess generating on wrong folder

Im having problems with the .htaccess being generated on the wrong folder. Let me explain it this way:

I have the root folder on my hosting which consists of different folders which corresponds to different domains that I have on the hosting (plus a few others that has got something to do with the hosting setup.)

root/domain1folder/
root/domain2folder/
and so on…

Now on each folder is the installation of the wordpress blog, which includes of course the .htaccess file for that domain name.

Now here goes the problem, there is this one .htaccess on the root folder. and it seems like this .htaccess file is being used by the domains I have on that same server instead of the .htaccess file which is in the same folder as the domain name.

What I did was to remove that .htaccess file in /root/ and also remove the one in the root/domain1folder/

and then of course the domain1folder.com have had a problem (404 error) so what I did was to re-save my permalinks in the wordpress dashboard which in turn automagically generated a new .htaccess file. The problem is instead of being generated on the root/domain1folder/ it gets generated on the /root/

another problem with this is that, if I do something that modifies the .htaccess on another domain like for example /root/domain2folder/ instead of modifying the one in the folder it modifies the one on the root which messes up the modification I made in that same .htaccess file for domain1.

I know I have to modify something somewhere so that my .htaccess file would be generated on the same folder as the same domain name instead of being generated on the /root/ but I don’t even know where to start.

any help folks?