N.Y. General Obligations Law § 7-103: Money deposited or advanced for use or rental of real property; waiver void; administration expenses

§ 7-103. Money deposited or advanced for use or rental of real

property; waiver void; administration expenses. 1. Whenever money shall

be deposited or advanced on a contract or license agreement for the use

or rental of real property as security for performance of the contract

or agreement or to be applied to payments upon such contract or

agreement 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 held in trust by the person

with whom such deposit or advance shall be made and shall not be mingled

with the personal moneys or become an asset of the person receiving the

same, but may be disposed of as provided in section 7-105 of this

chapter.

2. Whenever the person receiving money so deposited or advanced shall

deposit such money in a banking organization, such person shall

thereupon notify in writing each of the persons making such security

deposit or advance, giving the name and address of the banking

organization in which the deposit of security money is made, and the

amount of such deposit. Deposits in a banking organization pursuant to

the provisions of this subdivision shall be made in a banking

organization having a place of business within the state. If the person

depositing such security money in a banking organization shall deposit

same in an interest bearing account, he 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 in lieu of all other

administrative and custodial expenses. The balance of the interest paid

by the banking organization shall be the money of the person 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 leased premises, or annually paid to the person

making the deposit of security money.

2-a. Whenever the money so deposited or advanced is for the rental of

property containing six or more family dwelling units, 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.

2-b. In the event that a lease terminates other than at the time that

a banking organization in such area regularly pays interest, the person

depositing such security money shall pay over to his tenant such

interest as he is able to collect at the date of such lease termination.

3. Any provision of such a contract or agreement whereby a person who

so deposits or advances money waives any provision of this section is

absolutely void.

4. The term "real property" as used in this section is co-extensive in

meaning with lands, tenements and hereditaments.