BILL NUMBER: S6397
SPONSOR: JACKSON
 
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 arbitration 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 land-
lord; 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: S.180 - Referred to Judiciary/A.259 - Referred to Housing
2021-2022: S.2001-A - Amend and Recommit to Judiciary/A.7105-A - Amend
and Recommit to Housing
2019-2020: S.8431-A - Amend and Recommit to Judiciary
2021-2022: S.2001-A - Amend and Recommit to Judiciary/A.7105-A - Amend
and Recommit to Housing
 
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.