A 6423: Requires that the entire amount of a rental deposit or advance be refundable to the tenant upon the tenant's vacating of the premises except for an amount lawfully retained for non-payment of rent or utilities, damage caused by the tenant, or storage costs; requires landlord to provide an itemized statement of damages and to return the balance of the deposit within 14 days; requires that tenant be given the opportunity to inspect the rental premises prior to signing a lease; allows a grantee or assignee of the leased premises to demand that an escrow account be opened.

  
  STATE OF NEW YORK ________________________________________________________________________ 6423 2025-2026 Regular Sessions  IN ASSEMBLY March 4, 2025 ___________ Introduced by M. of A. LASHER -- read once and referred to the Committee on Judiciary 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 21 [his or its] such receiver's period of receivership. No deposit or 22 advance shall exceed the amount of one month's rent, plus accrued inter- 23 est, under any contract for the lease or tenancy of a dwelling unit 24 subject to this section. 25 3. Any agreement by a lessee or tenant of a dwelling unit waiving or 26 modifying [his] such lessee's or tenant's rights as set forth in this 27 section shall be void. The entire amount of the deposit or advance, EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02363-07-5 
 A. 6423 2 1 plus accrued interest, shall be refundable to the tenant upon the 2 tenant's vacating of the premises except for an amount lawfully retained 3 for the reasonable and itemized costs due to non-payment of rent, damage 4 caused by the tenant beyond normal wear and tear, non-payment of utility 5 charges payable directly to the landlord under the terms of the lease or 6 tenancy, and moving and storage of the tenant's belongings. The landlord 7 may not retain any amount of the deposit for costs relating to ordinary 8 wear and tear of occupancy or damage caused by a prior tenant. 9 4. After initial lease signing but before the tenant begins occupancy, 10 the landlord shall offer the tenant the opportunity to inspect the prem- 11 ises with the landlord or the landlord's agent to determine the condi- 12 tion of the property. If the tenant requests such inspection, the 13 parties shall execute a written agreement before the tenant begins occu- 14 pancy of the unit attesting to the condition of the property and specif- 15 ically noting any existing defects or damages. Upon the tenant's vacat- 16 ing of the premises, the landlord may not retain any amount of the 17 deposit or advance due to any condition, defect, or damage noted in such 18 agreement. The agreement shall be admissible as evidence of the condi- 19 tion of the premises at the beginning of occupancy only in proceedings 20 related to the return or amount of the security deposit. 21 5. Within a reasonable time after notification of either party's 22 intention to terminate the tenancy, unless the tenant terminates the 23 tenancy with less than two weeks' notice, the landlord shall notify the 24 tenant in writing of the tenant's right to request an inspection before 25 vacating the premises and of the tenant's right to be present at the 26 inspection. If the tenant requests such an inspection, the inspection 27 shall be made no earlier than two weeks and no later than one week 28 before the end of the tenancy. The landlord shall provide at least 29 forty-eight hours written notice of the date and time of the inspection. 30 After the inspection, the landlord shall provide the tenant with an 31 itemized statement specifying repairs or cleaning that are proposed to 32 be the basis of any deductions from the tenant's deposit. The tenant 33 shall have the opportunity to cure any such condition before the end of 34 the tenancy. Any statement produced pursuant to this subdivision shall 35 only be admissible in proceedings related to the return or amount of the 36 security deposit. 37 6. Within fourteen days after the tenant has vacated the premises, the 38 landlord shall provide the tenant with an itemized statement indicating 39 the basis for the amount of the deposit retained, if any, and shall 40 return any remaining portion of the deposit to the tenant, plus accrued 41 interest. If a landlord fails to provide the tenant with the statement 42 and deposit within fourteen days, the landlord shall forfeit any right 43 to retain any portion of the deposit. 44 7. In any action or proceeding disputing the amount of any portion of 45 the deposit retained, the landlord shall bear the burden of proof as to 46 the reasonableness of the amount retained. 47 8. Any person who violates the provisions of this section shall be 48 liable for actual damages, provided a person found to have willfully 49 violated this section shall be liable for punitive damages of up to 50 twice the amount of the deposit or advance. 51 9. (a) In circumstances where any sum of money or any other thing of 52 value deposited as security for the full performance by a tenant of the 53 terms of their lease is not turned over to a successor in interest 54 pursuant to section 7-105 of this title, the grantee or assignee of the 55 leased premises shall also be liable to such tenant, upon conveyance of 56 such leased premises, for the repayment of any such security deposit, 
 A. 6423 3 1 plus accrued interest, as to which such grantee or assignee has actual 2 knowledge. 3 (b) For purposes of this section, a grantee or assignee of the leased 4 premises shall be deemed to have actual knowledge of any security depos- 5 it which is (i) deposited at any time during the six months immediately 6 prior to closing or other transfer of title in any banking organization 7 pursuant to subdivision two-a of section 7-103 of this title, or (ii) 8 acknowledged in any lease in effect at the time of closing or other 9 transfer of title, or (iii) supported by documentary evidence provided 10 by the tenant or lessee as set forth in paragraph (c) of this subdivi- 11 sion. 12 (c) With respect to any leased premises for which there is no record 13 of security deposit pursuant to subparagraph (i) or (ii) of paragraph 14 (b) of this subdivision, the grantee or assignee of the leased premises 15 shall be obligated to notify the tenant thereof in writing no later than 16 thirty days following the closing or other transfer of title to the fact 17 that there is no record of a security deposit for said leased premises 18 and that unless the tenant within thirty days after receiving notice 19 provides them or it with documentary evidence of deposit, the tenant 20 shall have no further recourse against them or it for said security 21 deposit. For purposes of this subdivision, "documentary evidence" shall 22 be limited to any cancelled check drawn to the order of, a receipt from, 23 or a lease signed by any predecessor in interest, if such predecessor's 24 interest in the leased premises existed on or after the effective date 25 of this paragraph. Except as otherwise provided by subparagraphs (i) and 26 (ii) of paragraph (b) of this subdivision, the grantee or assignee of 27 the leased premises shall not be charged with actual knowledge of the 28 security deposit where the tenant fails within the thirty-day period to 29 provide such documentary evidence. Where the grantee or assignee of the 30 leased premises fails to notify the tenant as specified in this para- 31 graph within thirty days following the closing or other transfer of 32 title, the tenant shall be entitled to produce documentary evidence at 33 any time. 34 (d) The grantee or assignee of the leased premises shall have the 35 right to demand that the grantor or assignor thereof establish an escrow 36 account equal to one month's rent for any leased premises for which 37 there is no record of a security deposit pursuant to paragraph (b) of 38 this subdivision to be used for the purpose of holding harmless the 39 grantee or assignee in any case where, at a date subsequent to the clos- 40 ing or other transfer of title, the tenant gives notice pursuant to 41 paragraph (c) of this subdivision. 42 (e) The liability of a receiver for payment of any security deposit 43 plus accrued interest pursuant to this subdivision shall be limited to 44 the amount of such deposit actually turned over to them or it pursuant 45 to subdivision one of section 7-105 of this title and to the operating 46 income in excess of expenses generated during their or its period of 47 receivership. 48 10. Any agreement by a lessee or tenant of a dwelling waiving or modi- 49 fying their rights as set forth in this section shall be absolutely 50 void. 51 § 2. This act shall take effect on the thirtieth day after it shall 52 have become a law and shall apply to any lease or rental agreement or 53 renewal of a lease or rental agreement entered into on or after such 54 date.