N.Y. General Obligations Law § 7-101: Money deposited or advanced for use or rental of personal property; waiver void

§ 7-101. Money deposited or advanced for use or rental of personal

property; waiver void. 1. Whenever money shall be deposited or advanced

on a contract for the use or rental of personal property as security for

performance of the contract or to be applied to payments upon such

contract when due, such money, with interest accruing thereon, if any,

until repaid or so applied, shall continue to be the money of the person

making such deposit or advance and shall be a trust fund in the

possession of the person with whom such deposit or advance shall be made

and shall be deposited in a bank or trust company and shall not be

mingled with other funds or become an asset of such trustee, excepting,

however, that such trust funds may be deposited with other funds that

have been deposited or advanced to the trustee as security for

performance of a contract for the use or rental of personal property or

be applied to payments upon such contract when due. If the money being

deposited or advanced is for the use or rental of personal property and

the money deposited or advanced is seven hundred fifty dollars or more

and is for the use or rental of personal property for a period equal to

or greater than one hundred twenty days, the person receiving such money

shall deposit it pursuant to the provisions of subdivision one-a of this

section.

1-a. Whenever the money so deposited or advanced is seven hundred

fifty dollars or more and is for the use or rental of personal property

for a period equal to or greater than one hundred twenty days, the

person receiving such money shall, subject to the provisions of this

section, deposit it in an interest bearing account in a banking

organization within the state which account shall earn interest at a

rate which shall be the prevailing rate earned by other such deposits

made with banking organizations in such area. Such person shall not be

required to keep the funds of the separate persons from whom security

deposits or advances have been received in separate depository accounts,

provided his books of account shall clearly show the allocation of the

funds deposited in his general or special depository account. The person

depositing such security money shall be entitled to receive, as

administration expenses, a sum equivalent to one per cent per annum upon

the security money so deposited, which shall be deducted from the

interest earned on such security money from the banking organization and

shall be in lieu of all other administrative and custodial expenses

relating to the security deposit or advance. The balance of the interest

paid by the banking organization shall be the money of the lessee making

the deposit or advance and shall either be held in trust by the person

with whom such deposit or advance shall be made, until repaid or applied

for the use or rental of the personal property, or annually paid to the

lessee making the deposit of security money.

1-b. This section shall not be applicable to any advance payment of

money under or with respect to any contract for the use or rental of

personal property that, in accordance with the terms applicable to such

payment, either (a) is not revocable by the person making such payment

and is not otherwise subject to being returned or refunded to such

person, or (b) otherwise satisfies or discharges an equivalent liability

under such contract when such payment is made, whether or not such

liability is otherwise then due and payable under the terms of such

contract.

1-c. This section shall apply to money deposited or advanced on

contracts for the use or rental of personal property as security for

performance of the contract or to be applied to payments upon such

contract when due, only if (a) such contract is governed by the laws of

this state as the result of a choice of law provision in such contract,

in accordance with section 1--301 of the uniform commercial code

(subject to the limitations on choice of law by the parties to a

consumer lease under section 2-A-106 of the uniform commercial code), or

such contract is otherwise governed by the laws of this state in

accordance with applicable conflict of laws rules, and (b) the lessee

under such contract is located within this state, within the meaning of

the uniform commercial code (with respect to the location of debtors),

except that a foreign air carrier under the Federal Aviation Act of

1958, as amended, shall not be deemed located in this state solely as a

result of having a designated office of an agent upon whom service of

process may be made located in this state.

2. Any provision of a contract whereby a person who has deposited or

advanced money on a contract for the use or rental of personal property

as security for the performance of the contract waives any provision of

this section is absolutely void.

3. This section shall not be applicable to any deposit or advance of

money made in connection with the borrowing of securities for any lawful

purpose.