S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    629
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 8, 2025
                                ___________
 
 Introduced  by  M.  of A. ROSENTHAL, SIMON, COLTON, CRUZ, RAGA -- Multi-
   Sponsored by -- M.  of  A.  MANKTELOW,  McDONOUGH  --  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:
 
   Section  1.  Subdivision  1 of section 14 of the public housing law is
 amended by adding a new paragraph (y) to read as follows:
   (Y) ADMINISTER THE TENANCY  DEPOSIT  PROTECTION  PROGRAM  PURSUANT  TO
 SECTION 7-103 OF THE GENERAL OBLIGATIONS LAW.
   § 2. Section 7-103 of the general obligations law, as amended by chap-
 ter 1009 of the laws of 1970, subdivisions 2 and 2-a as amended by chap-
 ter 402 of the laws of 1979, is amended to read as follows:
   § 7-103. Money deposited or advanced for use or rental of real proper-
 ty;  [waiver  void;  administration expenses] TENANCY DEPOSIT PROTECTION
 PROGRAM. 1. [Whenever money shall be deposited or advanced on a contract
 or license agreement for the use or rental of real property as  security
 for  performance  of  the  contract  or  agreement  or  to be applied to
 payments upon such contract or agreement  when  due,  such  money,  with
 interest  accruing  thereon,  if  any, until repaid or so applied, shall
 continue to be the money of the person making such  deposit  or  advance
 and  shall  be  held  in  trust  by the person with whom such deposit or
 advance shall be made and shall not be mingled with the personal  moneys
 or become an asset of the person receiving the same, but may be disposed
 of  as provided in section 7-105 of this chapter.] THERE SHALL BE ESTAB-
 LISHED WITHIN THE DIVISION OF HOUSING AND COMMUNITY  RENEWAL  A  TENANCY
 DEPOSIT PROTECTION PROGRAM.
   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
              

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02218-01-5
 A. 629                              2

 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 per annum upon the security
 money so deposited, which shall be in lieu of all  other  administrative
 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 either be held in trust by the person with whom such
 deposit or advance shall be made, until repaid or applied for the use or
 rental of the leased premises, or annually paid to the person making the
 deposit of security money.
   2-a. Whenever the money so deposited or advanced is for the rental  of
 property  containing  six  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 organization
 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.
   2-b.  In the event that a lease terminates other than at the time that
 a banking organization in such area regularly pays interest, the  person
 depositing  such security money shall pay over to his tenant such inter-
 est as he is able to collect at the date  of  such  lease  termination.]
 SUCH PROGRAM SHALL:
   (A)  INCLUDE  A SYSTEM WHERE TENANT SECURITY DEPOSITS OR ADVANCES ON A
 CONTRACT OR AGREEMENT FOR THE USE OR RENTAL OF REAL PROPERTY ARE HELD BY
 A THIRD-PARTY CUSTODIAN AND ARBITER, WITH INTEREST ACCRUING THEREON;
   (B) REQUIRE LANDLORDS TO PLACE A TENANT'S SECURITY DEPOSIT OR  ADVANCE
 IN SUCH SYSTEM IF A SECURITY DEPOSIT OR ADVANCE IS RECEIVED;
   (C) INCLUDE A PROCESS FOR RETURNING THE SECURITY DEPOSIT OR ADVANCE TO
 THE TENANT;
   (D) REQUIRE THAT IF A LANDLORD WISHES TO WITHHOLD SUCH SECURITY DEPOS-
 IT  OR  ADVANCE,  THE  LANDLORD  SHALL MAKE AN AGREEMENT WITH THE TENANT
 SPECIFYING THE AMOUNT OF MONEY TO BE WITHHELD AND THE REASONS  FOR  SUCH
 WITHHOLDING;
   (E)  ESTABLISH  A DISPUTE RESOLUTION SERVICE FOR DISAGREEMENTS ARISING
 OVER THE WITHHOLDING OF A SECURITY DEPOSIT OR ADVANCE TO BE PROVIDED  AT
 NO COST TO THE LANDLORD AND TENANT;
   (F)  REQUIRE THAT BOTH PARTIES AGREE PRIOR TO USING THE DISPUTE RESOL-
 UTION SERVICE THAT THE DECISION OF SUCH SERVICE IS BINDING; AND
   (G) INCLUDE ANY OTHER  REGULATIONS  AS  DETERMINED  NECESSARY  BY  THE
 COMMISSIONER OF HOUSING AND COMMUNITY RENEWAL.
   2-A.  ANY  PERSON  WHO VIOLATES THE REQUIREMENT SPECIFIED IN PARAGRAPH
 (B) OF SUBDIVISION TWO OF THIS SECTION SHALL BE PUNISHED BY A CIVIL FINE
 OF UP TO FIFTEEN PERCENT OF THE ANNUAL RENT UNDER SUCH CONTRACT.
   3. Any provision of such a contract or agreement whereby a person  who
 so  deposits  or  advances money waives any provision of this section is
 absolutely void.
   4. The term "real property" as used in this section is co-extensive in
 meaning with lands, tenements and hereditaments.
   § 3. This act shall take effect on the one hundred twentieth day after
 it shall have become a law. Effective immediately, the addition,  amend-
 ment and/or repeal of any rule or regulation necessary for the implemen-
 tation  of  this act on its effective date are authorized to be made and
 completed on or before such effective date.