BILL NUMBER: S3026

SPONSOR: BAILEY
 
TITLE OF BILL:

An act to amend the general obligations law, in relation to permitting
lessees the option to pay security deposits in installments

 
PURPOSE:

This bill would permit tenants entering into a residential lease the
ability to pay their security deposit in installments.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one amends section 7-103 of the general obligations law by
adding a new subdivision 2-c.

Section two sets forth the effective date.

 
              

JUSTIFICATION:

A security deposit is an upfront payment demanded by a landlord from a
prospective tenant to insure against any damages made to a unit by an
outgoing tenant. In theory, security deposits should be returned in full
if no damages are made, and the landlord should retain no more than the
amount necessary to cover any expenses associated with needed repairs.
In practice, security deposits are poorly regulated and the result is an
arbitrary process that usually benefits the landlord and leaves the
tenant with no formal recourse to recover lost money.

New York State residents have long struggled to find affordable housing,
especially residents living in New York City. According to a report from
the office of New York City Controller Scott Stringer, New York City
tenants spent $507 million on security deposits in 2016. Often times, a
security deposit for a residential lease can be equivalent to two
months' worth of rent payments or more, creating a serious financial
burden for New Yorkers already struggling with exorbitant housing costs.
Most landlords will require this security deposit to be paid in full
along with their first month's rent at the time of signing a lease.

A security deposit, meant to provide security to a landlord in case of
damages to a unit, should not be preventing working-class residents from
being able to obtain safe and affordable housing. This legislation would
protect tenants and ensure renting an apartment does not become an
excessive financial burden by allowing tenants to pay their security
deposits in up to six installments. Landlords under this legislation
would be prohibited from imposing any additional fees or penalties on
tenants who elect to pay such deposit in installments.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

None to the State.

 
EFFECTIVE DATE:
This act shall take effect in 60 days.