S T A T E   O F   N E W   Y O R K
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                                  3838

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 28, 2009
                               ___________

Introduced  by  M. of A. LENTOL, WEINSTEIN, GREENE -- Multi-Sponsored by
  -- M. of A. BRENNAN, CLARK, COOK, DINOWITZ, ENGLEBRIGHT, GALEF, GLICK,
  GOTTFRIED, HOOPER, JACOBS, JOHN, PRETLOW, P. RIVERA, SEMINERIO -- read
  once and referred to the Committee on Judiciary

AN ACT to amend the general obligations law, in relation to  the  return
  of tenants' security deposits

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivisions 2 and 2-a of  section  7-103  of  the  general
obligations  law,  as  amended  by  chapter 402 of the laws of 1979, are
amended to read as follows:
  2.  Whenever the person receiving money so deposited or advanced shall
deposit such money in a banking organization, such person shall thereup-
on notify in writing each of the persons making such security deposit or
advance, giving the name and address  of  the  banking  organization  in
which  the  deposit  of  security  money is made, and the amount of such
deposit.  Deposits in a banking organization pursuant to the  provisions
of  this  subdivision  shall  be made in a banking organization having a
place of business within the state.  If the person depositing such secu-
rity money in a banking organization shall deposit same in  an  interest
bearing  account,  he  shall  be  entitled to receive, as administration
expenses, a sum equivalent to one [per cent] PERCENT per annum upon  the
security  money so deposited, which shall be in lieu of all other admin-
istrative and custodial expenses.  The balance of the interest  paid  by
the  banking  organization  shall  be the money of the person making the
deposit or advance and shall, AT THE OPTION OF THE TENANT, either (A) be
held in trust by the person with whom such deposit or advance  shall  be
made,  until repaid [or] PURSUANT TO THE PROVISIONS OF SUBDIVISION TWO-C
OF THIS SECTION, OR, (B) BE AT LEAST ANNUALLY applied  for  the  use  or
rental  of  the  leased premises, or, (C) BE annually paid to the person
making the deposit of security money.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05929-01-9
              

A. 3838                             2

  2-a. Whenever the money so deposited or advanced is for the rental  of
property  containing  [six]  THREE  or  more  family dwelling units, the
person receiving such money shall, subject to  the  provisions  of  this
section,  deposit  it in an interest bearing account in a banking organ-
ization  within  the  state  which account shall earn interest at a rate
which shall be the prevailing rate earned by other  such  deposits  made
with banking organizations in such area.
  S 2. Section 7-103 of the general obligations law is amended by adding
a new subdivision 2-c to read as follows:
  2-C.  (A)  UPON THE TERMINATION OF A RESIDENTIAL TENANCY AND SURRENDER
OF POSSESSION THEREOF, THE PERSON RECEIVING MONEY DEPOSITED OR  ADVANCED
AS  SECURITY  FOR  PERFORMANCE OF THE CONTRACT OR AGREEMENT SHALL RETURN
ANY SUCH MONEY PLUS ANY ACCRUED AND UNPAID INTEREST WITHIN  THIRTY  DAYS
BY  PERSONAL  DELIVERY,  OR  REGISTERED OR CERTIFIED MAIL, TO THE PERSON
MAKING SAID DEPOSIT OR ADVANCE. THE LANDLORD MUST AT THE TIME THE  MONEY
IS  RETURNED FURNISH A STATEMENT TO THE TENANT SHOWING THE AMOUNT OF THE
SECURITY DEPOSIT; ANY ACCRUED AND UNPAID  INTEREST  THEREON;  SEPARATELY
ITEMIZED  DEDUCTIONS,  IF  ANY,  AND THE BASIS THEREOF AS CLAIMED BY THE
LANDLORD; AND THE NET AMOUNT RETURNED TO THE TENANT.
  (B) PRIOR TO SAID RETURN IT SHALL BE PERMISSIBLE TO DEDUCT  FROM  SUCH
MONEY  DEPOSITED  OR  ADVANCED:  (I)  ANY UNPAID RENT OR ADDITIONAL COST
WHICH HAS NOT BEEN LAWFULLY WITHHELD OR (II) A REASONABLE AMOUNT  NECES-
SARY  TO  REPAIR  ANY  ACTUAL  DAMAGE,  ORDINARY WEAR AND TEAR EXCLUDED,
CAUSED TO THE DWELLING UNIT BY THE PERSON MAKING THE DEPOSIT OR  ADVANCE
OR  ANYONE  UNDER HIS CONTROL.   ANY SUCH DEDUCTION SHALL BE ITEMIZED IN
WRITING, WITH NOTICE BEING GIVEN TO THE PERSON  MAKING  THE  DEPOSIT  OR
ADVANCE  IN THE SAME MANNER AND WITHIN THE SAME TIME PERIOD AS SPECIFIED
IN THIS SUBDIVISION FOR THE RETURN OF MONEY  DEPOSITED.  SUCH  STATEMENT
SHALL  CONTAIN AN ITEMIZED DESCRIPTION OF SUCH DAMAGES; THE ESTIMATED OR
ACTUAL COST OF REPAIRS OF  EACH  ITEM;  AND  THE  AMOUNT  OF  ANY  OTHER
EXPENSES  WHICH  ARE  THE  RESPONSIBILITY  OF THE TENANT, AND HIS OR HER
REASON THEREFOR. IF ANY REPAIRS HAVE BEEN COMPLETED BY THE  LANDLORD  OR
HIS  OR HER STAFF THAT FACT SHALL BE NOTED ON THE STATEMENT OPPOSITE THE
PARTICULAR ITEM OF DAMAGE TOGETHER WITH THE ACTUAL COST OF REPAIR.
  (C) MERE ACCEPTANCE BY THE TENANT OF ANY STATEMENT RENDERED  OR  MONEY
RETURNED PURSUANT TO THE PROVISIONS OF THIS SECTION SHALL NOT OPERATE OR
BE  CONSTRUED TO DISCHARGE THE LANDLORD FROM DUTY TO RETURN MONEY SUBSE-
QUENTLY DETERMINED TO HAVE BEEN WRONGFULLY RETAINED.
  (D) IN ANY ACTION BROUGHT UNDER THIS SECTION TO RECOVER THE AMOUNT  OF
THE  SECURITY  DEPOSIT  AND ANY ACCRUED INTEREST OWED TO HIM OR HER, THE
BURDEN OF PROVING THE REASONABLENESS OF ANY DEDUCTIONS SHALL BE  ON  THE
PERSON WHO ASSERTS THEM.
  (E) IN ANY SUCH ACTION WHERE THE COURT FINDS THAT THE PERSON RECEIVING
THE  MONEY  DEPOSITED  OR  ADVANCED,  FRAUDULENTLY OR WITHOUT LEGITIMATE
BASIS THEREFOR:   (I) FAILED  TO  DEPOSIT  THE  MONEY  SO  DEPOSITED  OR
ADVANCED IN SUCH AN INTEREST BEARING ACCOUNT IF REQUIRED, OR (II) FAILED
TO  FURNISH THE STATEMENT HEREIN REQUIRED, OR (III) FAILED OR REFUSED TO
RETURN OR ACCOUNT FOR SAID MONEY TO THE PERSON  MAKING  THE  DEPOSIT  OR
ADVANCE  WITHIN THIRTY DAYS FROM THE DATE OF TERMINATION OF THE TENANCY,
OR (IV) MADE UNAUTHORIZED  DEDUCTIONS  FROM  SAID  PERSON'S  DEPOSIT  OR
ADVANCE, THE COURT MAY AWARD AS A CIVIL PENALTY NO MORE THAN THREE TIMES
THE  AMOUNT  OF MONEY DETERMINED TO HAVE BEEN WRONGFULLY RETAINED OR, IN
THE EVENT OF FAILURE TO DEPOSIT THE MONEY IN AN INTEREST BEARING ACCOUNT
IF REQUIRED, THREE TIMES THE AMOUNT OF INTEREST THE MONEY WOULD  REASON-
ABLY  HAVE  EARNED  IF  SO  DEPOSITED WITHOUT DEDUCTION FOR ANY ADMINIS-

A. 3838                             3

TRATION EXPENSE PLUS, IN EITHER CASE,  INTEREST  ON  SUCH  AMOUNT,  PLUS
REASONABLE ATTORNEY'S FEES AND EXPENSES.
  S  3. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law.