Senate Bill S6397

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6397
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                              March 13, 2025
                                ___________
 
 Introduced  by  Sen. JACKSON -- read twice and ordered printed, and when
   printed to be committed to the Committee on Judiciary
 
 AN ACT to amend the real property law, in relation to establishing secu-
   rity deposit options for certain tenants
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  real property law is amended by adding a new section
 238-b to read as follows:
   § 238-B. SECURITY DEPOSIT. 1.  A  LANDLORD  WHO  REQUIRES  A  SECURITY
 DEPOSIT  TO  BE  PAID  BY A TENANT WHICH IS COVERED BY THE PROVISIONS OF
 SECTIONS 7-107 AND 7-108 OF THE GENERAL OBLIGATIONS LAW  SHALL  ALSO  BE
 REQUIRED  TO  OFFER  TO  ACCEPT AT LEAST ONE OF THE FOLLOWING OPTIONS IN
 LIEU OF SUCH SECURITY DEPOSIT:
   A. PAYMENT OF ANY SECURITY DEPOSIT OVER A SERIES OF NO LESS  THAN  SIX
 EQUAL  MONTHLY  INSTALLMENT PAYMENTS, WHICH INSTALLMENTS SHALL BE DUE ON
 THE SAME DAY AS THE MONTHLY RENT PAYMENT AND WHICH MAY BE PAID  TOGETHER
 WITH THE MONTHLY RENT PAYMENT IN A SINGLE TRANSACTION, ABSENT A SEPARATE
 AGREEMENT BETWEEN SUCH LANDLORD AND TENANT;
   B.  PAYMENT  OF A REDUCED SECURITY DEPOSIT WHICH SHALL BE NO MORE THAN
 FIFTY PERCENT OF THE AMOUNT OF ONE MONTH'S RENT UNDER SUCH CONTRACT; OR
   C. IF SUCH TENANT QUALIFIES, PAYMENT OF ANY  DEPOSIT  PURSUANT  TO  18
 NYCRR 352.6.
   2.  IN  ADDITION  TO THE OPTIONS IN SUBDIVISION ONE OF THIS SECTION IN
 LIEU OF A SECURITY DEPOSIT, A LANDLORD MAY ACCEPT RENTAL SECURITY INSUR-
 ANCE, DEFINED AS A SURETY BOND   OR   INSURANCE  POLICY    ISSUED  BY  A
 LICENSED CARRIER IN THE STATE OF NEW YORK THAT GUARANTEES OR INDEMNIFIES
 A  TENANT  AFTER  DEFAULT OF A   FINANCIAL   OBLIGATION UNDER THE RENTAL
 AGREEMENT. IF THE LANDLORD WISHES TO OFFER OR  SUGGEST  RENTAL  SECURITY
 INSURANCE  THAT  IS PROVIDED BY ITSELF OR A SEPARATE COMPANY, THE RENTAL
 SECURITY INSURANCE OFFERED MUST SATISFY THE FOLLOWING CRITERIA:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03281-01-5
 S. 6397                             2
              

 
   A. THE  INSURANCE  PROVIDER  IS  AN APPROVED CARRIER LICENSED  BY  THE
 DEPARTMENT  OF FINANCIAL SERVICES  PURSUANT  TO  ARTICLE  ELEVEN  OF THE
 INSURANCE LAW;
   B. THE  COVERAGE IS EFFECTIVE UPON THE PAYMENT OF THE FIRST PREMIUM OR
 FEE AND REMAINS EFFECTIVE FOR THE ENTIRE LEASE TERM;
   C. ANY DISPUTE UNDER THE COVERAGE CANNOT REQUIRE ARBITRATION AND WAIVE
 THE TENANT'S RIGHT TO GO TO COURT;
   D.  THE  AMOUNT  PAID  BY  THE  TENANT CANNOT EXCEED THE AMOUNT OF THE
 COVERAGE;
   E. THE TENANT CANNOT BE LIABLE  TO  THE  INSURANCE  PROVIDER  FOR  ANY
 CLAIMS PAID OUT TO THE LANDLORD; AND
   F.  THE  COVERAGE  PROVIDED PER CLAIM IS NO LESS THAN THE AMOUNT  SUCH
 LANDLORD REQUIRES FOR SECURITY DEPOSITS.
   3. A TENANT WHO ELECTS TO PROVIDE RENTAL SECURITY INSURANCE,  PURSUANT
 TO PARAGRAPH A OF SUBDIVISION ONE OF THIS SECTION, IN LIEU OF A REQUIRED
 SECURITY DEPOSIT SHALL NOT BE REQUIRED TO PROVIDE ADDITIONAL SECURITY OR
 INSURANCE  COVERAGE  PER  CLAIM  IN  AN  AMOUNT  GREATER THAN THE AMOUNT
 REQUIRED FOR THE SECURITY DEPOSIT.
   4. SUCH LANDLORD SHALL NOT IMPOSE ANY ADDITIONAL FEES OR INTEREST ON A
 TENANT THAT PAYS THEIR SECURITY DEPOSIT IN AN ALTERNATE MANNER  PURSUANT
 TO SUBDIVISION ONE OF THIS SECTION.
   5.  ANY  AGREEMENT  TO PAY A SECURITY DEPOSIT IN INSTALLMENTS SHALL BE
 INCLUDED WITHIN SUCH CONTRACT, LEASE OR AGREEMENT AND SHALL SPECIFY  THE
 TOTAL DEPOSIT AMOUNT DUE AND THE AMOUNT DUE FOR EACH INSTALLMENT.
   6.  PRIOR  TO  ENTERING  INTO  A CONTRACT, LEASE OR RENTAL AGREEMENT A
 LANDLORD SHALL PROVIDE THE TENANT WRITTEN NOTICE OF THE AVAILABLE  SECU-
 RITY  DEPOSIT  ALTERNATIVES  AND  INCLUDE  THE FOLLOWING LANGUAGE: "IF A
 SECURITY DEPOSIT IS REQUIRED, TENANT HAS THE RIGHT TO REQUEST AND  LAND-
 LORD IS REQUIRED TO ACCEPT ONE OF THE FOLLOWING THREE ALTERNATIVES: A. A
 DEPOSIT  PAID  OVER  NO  LESS  THAN SIX EQUAL MONTHLY INSTALLMENTS; B. A
 ONE-TIME REDUCED SECURITY DEPOSIT PAYMENT OF NO MORE THAN FIFTY  PERCENT
 OF  THE  MONTHLY  RENTAL RATE CHARGED FOR THE RENTAL UNIT; OR C. IF SUCH
 TENANT QUALIFIES, A  DEPOSIT  PAID  THROUGH  THE  DEPARTMENT  OF  SOCIAL
 SERVICES  GRANT PROGRAM PURSUANT TO 18 NYCRR 352.6.  TENANT SHALL NOT BE
 REQUIRED TO PROVIDE RENTAL SECURITY INSURANCE COVERAGE PER CLAIM  IN  AN
 AMOUNT GREATER THAN THE AMOUNT REQUIRED FOR THE SECURITY DEPOSIT".
   7.  THE  REQUIREMENTS  OF  THIS  SECTION SHALL BE CONSIDERED SOURCE OF
 INCOME AS DEFINED BY SUBDIVISION THIRTY-SIX OF SECTION TWO HUNDRED NINE-
 TY-TWO OF THE EXECUTIVE LAW AND ANY VIOLATION OF THIS SECTION MAY  BE  A
 VIOLATION OF SECTION TWO HUNDRED NINETY-SIX OF THE EXECUTIVE LAW.
   §  2.  This  act shall take effect on the thirtieth day after it shall
 have become a law. Effective immediately, the addition, amendment and/or
 repeal of any rule or regulation necessary  for  the  implementation  of
 this  act  on its effective date are authorized to be made and completed
 on or before such effective date.