STATE OF NEW YORK ________________________________________________________________________ 952--A Cal. No. 344 2025-2026 Regular Sessions IN SENATE (Prefiled) January 8, 2025 ___________ Introduced by Sen. KAVANAGH -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the general obligations law, in relation to the liabil- ity of a grantee or assignee for deposits made by tenants upon convey- ance of rent stabilized dwelling units The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 7-107 of the general obligations law, as added by 2 chapter 917 of the laws of 1984, is amended to read as follows: 3 § 7-107. Liability of a grantee or assignee for deposits made by 4 tenants upon conveyance of rent stabilized dwelling units. 1. This 5 section shall apply only to dwelling units subject to the New York city 6 rent stabilization law of nineteen hundred sixty-nine or the emergency 7 tenant protection act of nineteen seventy-four. 8 2. (a) Any grantee or assignee of any dwelling unit referred to in 9 subdivision one of this section shall be liable to a tenant for any sum 10 of money or any other thing of value deposited as security for the full 11 performance by such tenant of the terms of [his] such tenant's lease, 12 plus any accrued interest, if [his] such tenant or its predecessor in 13 interest was liable for such funds. Such liability shall attach whether 14 or not the successor in interest has, upon the conveyance of such dwell- 15 ing unit, received the sum as deposited. 16 (b) The liability of a receiver for payment of any security deposit 17 plus accrued interest pursuant to this subdivision shall be limited to 18 the amount of such deposit actually turned over to [him or it] such 19 receiver pursuant to subdivision one of section 7-105 of this [chapter] 20 title and to the operating income in excess of expenses generated during EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02363-06-5
S. 952--A 2 1 [his or its] such receiver's period of receivership. No deposit or 2 advance shall exceed the amount of one month's rent, plus accrued inter- 3 est, under any contract for the lease or tenancy of a dwelling unit 4 subject to this section. 5 3. Any agreement by a lessee or tenant of a dwelling unit waiving or 6 modifying [his] such lessee's or tenant's rights as set forth in this 7 section shall be void. The entire amount of the deposit or advance, 8 plus accrued interest, shall be refundable to the tenant upon the 9 tenant's vacating of the premises except for an amount lawfully retained 10 for the reasonable and itemized costs due to non-payment of rent, damage 11 caused by the tenant beyond normal wear and tear, non-payment of utility 12 charges payable directly to the landlord under the terms of the lease or 13 tenancy, and moving and storage of the tenant's belongings. The landlord 14 may not retain any amount of the deposit for costs relating to ordinary 15 wear and tear of occupancy or damage caused by a prior tenant. 16 4. After initial lease signing but before the tenant begins occupancy, 17 the landlord shall offer the tenant the opportunity to inspect the prem- 18 ises with the landlord or the landlord's agent to determine the condi- 19 tion of the property. If the tenant requests such inspection, the 20 parties shall execute a written agreement before the tenant begins occu- 21 pancy of the unit attesting to the condition of the property and specif- 22 ically noting any existing defects or damages. Upon the tenant's vacat- 23 ing of the premises, the landlord may not retain any amount of the 24 deposit or advance due to any condition, defect, or damage noted in such 25 agreement. The agreement shall be admissible as evidence of the condi- 26 tion of the premises at the beginning of occupancy only in proceedings 27 related to the return or amount of the security deposit. 28 5. Within a reasonable time after notification of either party's 29 intention to terminate the tenancy, unless the tenant terminates the 30 tenancy with less than two weeks' notice, the landlord shall notify the 31 tenant in writing of the tenant's right to request an inspection before 32 vacating the premises and of the tenant's right to be present at the 33 inspection. If the tenant requests such an inspection, the inspection 34 shall be made no earlier than two weeks and no later than one week 35 before the end of the tenancy. The landlord shall provide at least 36 forty-eight hours written notice of the date and time of the inspection. 37 After the inspection, the landlord shall provide the tenant with an 38 itemized statement specifying repairs or cleaning that are proposed to 39 be the basis of any deductions from the tenant's deposit. The tenant 40 shall have the opportunity to cure any such condition before the end of 41 the tenancy. Any statement produced pursuant to this subdivision shall 42 only be admissible in proceedings related to the return or amount of the 43 security deposit. 44 6. Within fourteen days after the tenant has vacated the premises, the 45 landlord shall provide the tenant with an itemized statement indicating 46 the basis for the amount of the deposit retained, if any, and shall 47 return any remaining portion of the deposit to the tenant, plus accrued 48 interest. If a landlord fails to provide the tenant with the statement 49 and deposit within fourteen days, the landlord shall forfeit any right 50 to retain any portion of the deposit. 51 7. In any action or proceeding disputing the amount of any portion of 52 the deposit retained, the landlord shall bear the burden of proof as to 53 the reasonableness of the amount retained. 54 8. Any person who violates the provisions of this section shall be 55 liable for actual damages, provided a person found to have willfully
S. 952--A 3 1 violated this section shall be liable for punitive damages of up to 2 twice the amount of the deposit or advance. 3 9. (a) In circumstances where any sum of money or any other thing of 4 value deposited as security for the full performance by a tenant of the 5 terms of their lease is not turned over to a successor in interest 6 pursuant to section 7-105 of this title, the grantee or assignee of the 7 leased premises shall also be liable to such tenant, upon conveyance of 8 such leased premises, for the repayment of any such security deposit, 9 plus accrued interest, as to which such grantee or assignee has actual 10 knowledge. 11 (b) For purposes of this section, a grantee or assignee of the leased 12 premises shall be deemed to have actual knowledge of any security depos- 13 it which is (i) deposited at any time during the six months immediately 14 prior to closing or other transfer of title in any banking organization 15 pursuant to subdivision two-a of section 7-103 of this title, or (ii) 16 acknowledged in any lease in effect at the time of closing or other 17 transfer of title, or (iii) supported by documentary evidence provided 18 by the tenant or lessee as set forth in paragraph (c) of this subdivi- 19 sion. 20 (c) With respect to any leased premises for which there is no record 21 of security deposit pursuant to subparagraph (i) or (ii) of paragraph 22 (b) of this subdivision, the grantee or assignee of the leased premises 23 shall be obligated to notify the tenant thereof in writing no later than 24 thirty days following the closing or other transfer of title to the fact 25 that there is no record of a security deposit for said leased premises 26 and that unless the tenant within thirty days after receiving notice 27 provides them or it with documentary evidence of deposit, the tenant 28 shall have no further recourse against them or it for said security 29 deposit. For purposes of this subdivision, "documentary evidence" shall 30 be limited to any cancelled check drawn to the order of, a receipt from, 31 or a lease signed by any predecessor in interest, if such predecessor's 32 interest in the leased premises existed on or after the effective date 33 of this paragraph. Except as otherwise provided by subparagraphs (i) and 34 (ii) of paragraph (b) of this subdivision, the grantee or assignee of 35 the leased premises shall not be charged with actual knowledge of the 36 security deposit where the tenant fails within the thirty-day period to 37 provide such documentary evidence. Where the grantee or assignee of the 38 leased premises fails to notify the tenant as specified in this para- 39 graph within thirty days following the closing or other transfer of 40 title, the tenant shall be entitled to produce documentary evidence at 41 any time. 42 (d) The grantee or assignee of the leased premises shall have the 43 right to demand that the grantor or assignor thereof establish an escrow 44 account equal to one month's rent for any leased premises for which 45 there is no record of a security deposit pursuant to paragraph (b) of 46 this subdivision to be used for the purpose of holding harmless the 47 grantee or assignee in any case where, at a date subsequent to the clos- 48 ing or other transfer of title, the tenant gives notice pursuant to 49 paragraph (c) of this subdivision. 50 (e) The liability of a receiver for payment of any security deposit 51 plus accrued interest pursuant to this subdivision shall be limited to 52 the amount of such deposit actually turned over to them or it pursuant 53 to subdivision one of section 7-105 of this title and to the operating 54 income in excess of expenses generated during their or its period of 55 receivership.
S. 952--A 4 1 10. Any agreement by a lessee or tenant of a dwelling waiving or modi- 2 fying their rights as set forth in this section shall be absolutely 3 void. 4 § 2. This act shall take effect on the thirtieth day after it shall 5 have become a law and shall apply to any lease or rental agreement or 6 renewal of a lease or rental agreement entered into on or after such 7 date.