§ 338. Security interest prohibited. 1. No retail lease agreement, or
any other agreement executed by the lessee in connection therewith,
shall provide for the creation of a security interest in any personal or
real property of the lessee to secure the payment of the debt arising
from the lease. This prohibition shall not apply to: (a) the taking of
a security deposit, advance payment of rent or other prepayment by cash,
check or similar means; (b) the retention or exercise by a banking
organization of a right of set off; or (c) the retention of a security
interest in the proceeds, cancellation refunds or other rights of the
lessee under any insurance, repair or service contract whose cost is
included in the total monthly lease payment.

2. A security interest taken in violation of this section shall be
void but shall not otherwise affect the validity of a retail lease
agreement.