BILL NUMBER:  S2461

 TITLE OF BILL :
An act to amend the general obligations law, in relation to money
deposited as security in certain cases and enforcement of trust
provisions by attorney general


 PURPOSE :
This bill would clarify the Attorney General's authority to take proof
and issue subpoenas, and would further authorize the Attorney General
to obtain costs, in connection with an action or a proceeding to
compel compliance with the General Obligations Law regarding the
collection of rent security deposits.

 SUMMARY :
The bill amends General Obligations Law, §7-109, by adding language
which: a) gives the Attorney General explicit authority to take proof,
make a determination of the relevant facts and issue subpoenas in
accordance with the CPLR in connection with the proposed institution
of an action or proceeding to compel compliance with the provisions of
the General Obligations Law regarding residential rent security
deposits; and b) authorizes, in the court's discretion, an allowance
for costs not exceeding $2,000 against each respondent found in an
action or proceeding brought by the Attorney General to compel
compliance with those provisions of the General Obligations Law, to
              

have committed a violation.

 JUSTIFICATION :
§7-109 of the General Obligations Law was enacted in 1973 (originally
as § 7-107) to grant to the Attorney General specific authority to
bring an action or proceeding against any person, association or
corporation that has violated or is violating any of the provisions of
Title I of Article 7 of the General Obligations Law which protects a
tenant's rent security deposit and requires a landlord to place said
deposit in an interest bearing account. The enactment of section 7-109
has enabled the Attorney General to combat violations of the rent
security deposits law. For the period January 1, 1988 through December
14, 1992, a total of 3,701 rent security complaints were received by
the Department of Law. While the bulk of these cases were resolved
through mediation, the Attorney General found it necessary on some
occasions to institute legal proceedings to protect the rights of
tenants who gave security deposits to their landlords. The handling of
these cases require a significant expenditure of resources and time in
order to ensure that tenants' rent security deposits are protected.
The Attorney General was given important, increased enforcement
obligations respecting tenant security deposits by Chapter 917 of the
Laws of 1984. Two additional sections, 7-107 and 7-108, were added to
the General Obligations Law by this chapter to ensure the protection
of tenants' security deposits upon the conveyance of a residential
building. These sections cast liability, with appropriate limits, upon
the buyers of residential buildings.  Existing case law holds that the
Attorney General's standing to bring an action or proceeding to compel
compliance with section 7-103 is derived solely from section 7-109,
and that he may not sue for refunds of rent security deposits under
Executive Law, §63(12). Furthermore, since CPLR 830.3 authorizes an
allowance for costs in actions or proceedings brought under Executive
Law, §63(12), and not in actions or proceedings brought under General
Obligations Law, §7-109, some courts have held that the Attorney
General is not permitted to seek costs in rent security cases. There
is no apparent reason to deny the Attorney General a discretionary
award of costs in rent security cases while permitting such an award
in all other consumer frauds cases. No legislative history exists to
indicate any desire to exclude such a costs award. This bill would
correct the problem. This bill also makes it clear that the A.G. has
authority under General Obligations Law, §7-109, to take proof and to
issue subpoenas in preparation for the institution of an action or
proceeding to compel compliance with the law.

 PRIOR LEGISLATIVE HISTORY :
New Bill.

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
Immediately, and shall apply only to actions or proceedings commenced
on or after its effective date.