Establishes security deposit options for certain tenants, including but not limited to, an option to pay any deposit or advance to rent or use residential real property or a dwelling unit.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1431
SPONSOR: Gonzalez-Rojas (MS) TITLE OF BILL:
An act to amend the real property law, in relation to establishing secu-
rity deposit options for certain tenants
PURPOSE:
The purpose of this bill is to provide financial alternatives to pay
rental security deposits for tenants of market and rent regulated units.
SUMMARY OF PROVISIONS:
Section 1 adds a new Section 238-B to the Real Property Law. This new
section provides that landlords who require security deposits to be paid
by a tenant shall be required to offer and accept at least one of the
following options in lieu of such security deposit: (1) payment of any
security deposit over no less than 6 equal monthly installments that are
due the same day as rent and which may be paid with rent in a single
transaction; (2) a reduced security deposit amount no more than 50% of
one month's rent; or (3) if a tenant qualifies, payment of a security
deposit pursuant to 18 NYCRR 352.6.
A landlord may choose to accept rental security deposit insurance in
lieu of a security deposit. If the landlord accepts the insurance, the
security deposit insurance must satisfy the following criteria:
(1) the insurance provider is an approved carrier licensed by the
Department of Financial Services; (2) the coverage is effective upon the
payment of the first premium or fee and remains effective for the entire
lease term; (3) any dispute under the coverage cannot require arbi-
tration and waive the tenant's right to go to court; (4) the amount paid
by the tenant cannot exceed the amount of the coverage; (5) the tenant
cannot be liable to the insurance provider for any claims paid out to
the landlord; and (6) the coverage provided per claim is no less than
the amount such landlord requires for security deposits.
A tenant that chooses to provide rental security insurance shall not be
required to provide additional security or insurance coverage per claim
in an amount greater than the security deposit. A landlord cannot
require any additional fees or interest on a tenant that pays their
security deposit in an alternate manner. Any agreement to pay a security
deposit in installments must be included in a contract, lease, or agree-
ment with the total amount due and the specified amount owed at each
installment. The landlord is also required to provide written notice to
the tenant of security deposit alternatives.
A landlord's refusal or rejection to accept security deposit alternative
payments is considered a source of income violation.
Section 2 is the effective date.
JUSTIFICATION:
As the housing market continues to tighten, we must do everything we can
to make the best possible housing options available to people in finan-
cial need. One essential function of this act provides security deposit
insurance for renters or alternate payment methods for security depos-
its. The insurance carrier would be under the supervision of the state
financial services agency. The insurance would take effect as soon as
the renter filled the property. Their coverage must be no less than the
amount the landlord requires for security deposit. In addition, the bill
also provides additional tenant protections. These include a security
deposit program in Public Housing Law to create a security deposit and
guarantee program for people who receive certain social service
programs.
LEGISLATIVE HISTORY:
2023-2024: A259 - Introduced and referred to Housing Committee
2021-2022: Amend and Recommit to Judiciary/Amend and Recommit to Housing
2019-2020: S.8431-A - Amend and Recommit to Judiciary
STATE AND LOCAL FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall have
become a law. Effective immediately, the addition, amendment and/or
repeal of any rule or regulation necessary for the implementation of
this act on its effective date are authorized to be made and completed
on or before such effective date.
STATE OF NEW YORK
________________________________________________________________________
1431
2025-2026 Regular Sessions
IN ASSEMBLY
January 9, 2025
___________
Introduced by M. of A. GONZALEZ-ROJAS, TAYLOR, DAVILA -- Multi-Sponsored
by -- M. of A. SIMON -- read once and referred to the Committee on
Housing
AN ACT to amend the real property law, in relation to establishing secu-
rity deposit options for certain tenants
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The real property law is amended by adding a new section
2 238-b to read as follows:
3 § 238-b. Security deposit. 1. A landlord who requires a security
4 deposit to be paid by a tenant which is covered by the provisions of
5 sections 7-107 and 7-108 of the general obligations law shall also be
6 required to offer to accept at least one of the following options in
7 lieu of such security deposit:
8 a. Payment of any security deposit over a series of no less than six
9 equal monthly installment payments, which installments shall be due on
10 the same day as the monthly rent payment and which may be paid together
11 with the monthly rent payment in a single transaction, absent a separate
12 agreement between such landlord and tenant;
13 b. Payment of a reduced security deposit which shall be no more than
14 fifty percent of the amount of one month's rent under such contract; or
15 c. If such tenant qualifies, payment of any deposit pursuant to 18
16 NYCRR 352.6.
17 2. In addition to the options in subdivision one of this section in
18 lieu of a security deposit, a landlord may accept rental security insur-
19 ance, defined as a surety bond or insurance policy issued by a
20 licensed carrier in the state of New York that guarantees or indemnifies
21 a tenant after default of a financial obligation under the rental
22 agreement. If the landlord wishes to offer or suggest rental security
23 insurance that is provided by itself or a separate company, the rental
24 security insurance offered must satisfy the following criteria:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03281-01-5
A. 1431 2
1 a. the insurance provider is an approved carrier licensed by the
2 department of financial services pursuant to article eleven of the
3 insurance law;
4 b. the coverage is effective upon the payment of the first premium or
5 fee and remains effective for the entire lease term;
6 c. any dispute under the coverage cannot require arbitration and waive
7 the tenant's right to go to court;
8 d. the amount paid by the tenant cannot exceed the amount of the
9 coverage;
10 e. the tenant cannot be liable to the insurance provider for any
11 claims paid out to the landlord; and
12 f. the coverage provided per claim is no less than the amount such
13 landlord requires for security deposits.
14 3. A tenant who elects to provide rental security insurance, pursuant
15 to paragraph a of subdivision one of this section, in lieu of a required
16 security deposit shall not be required to provide additional security or
17 insurance coverage per claim in an amount greater than the amount
18 required for the security deposit.
19 4. Such landlord shall not impose any additional fees or interest on a
20 tenant that pays their security deposit in an alternate manner pursuant
21 to subdivision one of this section.
22 5. Any agreement to pay a security deposit in installments shall be
23 included within such contract, lease or agreement and shall specify the
24 total deposit amount due and the amount due for each installment.
25 6. Prior to entering into a contract, lease or rental agreement a
26 landlord shall provide the tenant written notice of the available secu-
27 rity deposit alternatives and include the following language: "If a
28 security deposit is required, tenant has the right to request and land-
29 lord is required to accept one of the following three alternatives: a. a
30 deposit paid over no less than six equal monthly installments; b. a
31 one-time reduced security deposit payment of no more than fifty percent
32 of the monthly rental rate charged for the rental unit; or c. if such
33 tenant qualifies, a deposit paid through the department of social
34 services grant program pursuant to 18 NYCRR 352.6. Tenant shall not be
35 required to provide rental security insurance coverage per claim in an
36 amount greater than the amount required for the security deposit".
37 7. The requirements of this section shall be considered source of
38 income as defined by subdivision thirty-six of section two hundred nine-
39 ty-two of the executive law and any violation of this section may be a
40 violation of section two hundred ninety-six of the executive law.
41 § 2. This act shall take effect on the thirtieth day after it shall
42 have become a law. Effective immediately, the addition, amendment and/or
43 repeal of any rule or regulation necessary for the implementation of
44 this act on its effective date are authorized to be made and completed
45 on or before such effective date.
