Bill Text: NY A05265 | 2019-2020 | General Assembly | Introduced

Bill Title: Relates to establishing the tenancy deposit protection program; requires the commissioner of housing and community renewal to establish a program to hold security deposits in third-party accounts and create a dispute resolution process regarding the withholding of security deposits.

Spectrum: Moderate Partisan Bill (Democrat 13-2)

Status: (Introduced) 2019-02-08 - referred to housing [A05265 Detail]

Download: New_York-2019-A05265-Introduced.html

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    February 8, 2019
        Introduced  by  M.  of  A. L. ROSENTHAL -- read once and referred to the
          Committee on Housing
        AN ACT to amend the public housing law and the general obligations  law,
          in relation to establishing the tenancy deposit protection program
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. Subdivision 1 of section 14 of the public  housing  law  is
     2  amended by adding a new paragraph (x) to read as follows:
     3    (x)  administer  the  tenancy  deposit  protection program pursuant to
     4  section 7-103 of the general obligations law.
     5    § 2. Section 7-103 of the general obligations law, as amended by chap-
     6  ter 1009 of the laws of 1970, subdivisions 2 and 2-a as amended by chap-
     7  ter 402 of the laws of 1979, is amended to read as follows:
     8    § 7-103. Money deposited or advanced for use or rental of real proper-
     9  ty; [waiver void; administration expenses]  tenancy  deposit  protection
    10  program. 1. [Whenever money shall be deposited or advanced on a contract
    11  or  license agreement for the use or rental of real property as security
    12  for performance of the  contract  or  agreement  or  to  be  applied  to
    13  payments  upon  such  contract  or  agreement when due, such money, with
    14  interest accruing thereon, if any, until repaid  or  so  applied,  shall
    15  continue  to  be  the money of the person making such deposit or advance
    16  and shall be held in trust by the  person  with  whom  such  deposit  or
    17  advance  shall be made and shall not be mingled with the personal moneys
    18  or become an asset of the person receiving the same, but may be disposed
    19  of as provided in section 7-105 of this chapter.] There shall be  estab-
    20  lished  within  the  division of housing and community renewal a tenancy
    21  deposit protection program.
    22    2. [Whenever the person receiving money so deposited or advanced shall
    23  deposit such money in a banking organization, such person shall thereup-
    24  on notify in writing each of the persons making such security deposit or
    25  advance, giving the name and address  of  the  banking  organization  in
    26  which  the  deposit  of  security  money is made, and the amount of such
    27  deposit. Deposits in a banking organization pursuant to  the  provisions
    28  of  this  subdivision  shall  be made in a banking organization having a

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

        A. 5265                             2

     1  place of business within the state. If the person depositing such  secu-
     2  rity  money  in a banking organization shall deposit same in an interest
     3  bearing account, he shall be  entitled  to  receive,  as  administration
     4  expenses,  a  sum equivalent to one per cent per annum upon the security
     5  money so deposited, which shall be in lieu of all  other  administrative
     6  and  custodial expenses. The balance of the interest paid by the banking
     7  organization shall be the money of the  person  making  the  deposit  or
     8  advance  and  shall either be held in trust by the person with whom such
     9  deposit or advance shall be made, until repaid or applied for the use or
    10  rental of the leased premises, or annually paid to the person making the
    11  deposit of security money.
    12    2-a. Whenever the money so deposited or advanced is for the rental  of
    13  property  containing  six  or  more  family  dwelling  units, the person
    14  receiving such money shall, subject to the provisions of  this  section,
    15  deposit  it  in  an  interest  bearing account in a banking organization
    16  within the state which account shall earn interest at a rate which shall
    17  be the prevailing rate earned by other such deposits made  with  banking
    18  organizations in such area.
    19    2-b.  In the event that a lease terminates other than at the time that
    20  a banking organization in such area regularly pays interest, the  person
    21  depositing  such security money shall pay over to his tenant such inter-
    22  est as he is able to collect at the date  of  such  lease  termination.]
    23  Such program shall:
    24    (a)  include  a system where tenant security deposits or advances on a
    25  contract or agreement for the use or rental of real property are held by
    26  a third-party custodian and arbiter, with interest accruing thereon;
    27    (b) require landlords to place a tenant's security deposit or  advance
    28  in such system if a security deposit or advance is received;
    29    (c) include a process for returning the security deposit or advance to
    30  the tenant;
    31    (d) require that if a landlord wishes to withhold such security depos-
    32  it  or  advance,  the  landlord  shall make an agreement with the tenant
    33  specifying the amount of money to be withheld and the reasons  for  such
    34  withholding;
    35    (e)  establish  a dispute resolution service for disagreements arising
    36  over the withholding of a security deposit or advance to be provided  at
    37  no cost to the landlord and tenant;
    38    (f)  require that both parties agree prior to using the dispute resol-
    39  ution service that the decision of such service is binding; and
    40    (g) include any other  regulations  as  determined  necessary  by  the
    41  commissioner of housing and community renewal.
    42    2-a.  Any  person  who violates the requirement specified in paragraph
    43  (b) of subdivision two of this section shall be punished by a civil fine
    44  of up to fifteen percent of the annual rent under such contract.
    45    3. Any provision of such a contract or agreement whereby a person  who
    46  so  deposits  or  advances money waives any provision of this section is
    47  absolutely void.
    48    4. The term "real property" as used in this section is co-extensive in
    49  meaning with lands, tenements and hereditaments.
    50    § 3. This act shall take effect on the one hundred twentieth day after
    51  it shall have become a law. Effective immediately, the addition,  amend-
    52  ment and/or repeal of any rule or regulation necessary for the implemen-
    53  tation  of  this act on its effective date are authorized to be made and
    54  completed on or before such effective date.