§ 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\nproperty; waiver void. 1. Whenever money shall be deposited or advanced\non a contract for the use or rental of personal property as security for\nperformance of the contract or to be applied to payments upon such\ncontract when due, such money, with interest accruing thereon, if any,\nuntil repaid or so applied, shall continue to be the money of the person\nmaking such deposit or advance and shall be a trust fund in the\npossession of the person with whom such deposit or advance shall be made\nand shall be deposited in a bank or trust company and shall not be\nmingled with other funds or become an asset of such trustee, excepting,\nhowever, that such trust funds may be deposited with other funds that\nhave been deposited or advanced to the trustee as security for\nperformance of a contract for the use or rental of personal property or\nbe applied to payments upon such contract when due. If the money being\ndeposited or advanced is for the use or rental of personal property and\nthe money deposited or advanced is seven hundred fifty dollars or more\nand is for the use or rental of personal property for a period equal to\nor greater than one hundred twenty days, the person receiving such money\nshall deposit it pursuant to the provisions of subdivision one-a of this\nsection.\n 1-a. Whenever the money so deposited or advanced is seven hundred\nfifty dollars or more and is for the use or rental of personal property\nfor a period equal to or greater than one hundred twenty days, the\nperson receiving such money shall, subject to the provisions of this\nsection, deposit it in an interest bearing account in a banking\norganization within the state which account shall earn interest at a\nrate which shall be the prevailing rate earned by other such deposits\nmade with banking organizations in such area. Such person shall not be\nrequired to keep the funds of the separate persons from whom security\ndeposits or advances have been received in separate depository accounts,\nprovided his books of account shall clearly show the allocation of the\nfunds deposited in his general or special depository account. The person\ndepositing such security money shall be entitled to receive, as\nadministration expenses, a sum equivalent to one per cent per annum upon\nthe security money so deposited, which shall be deducted from the\ninterest earned on such security money from the banking organization and\nshall be in lieu of all other administrative and custodial expenses\nrelating to the security deposit or advance. The balance of the interest\npaid by the banking organization shall be the money of the lessee making\nthe deposit or advance and shall either be held in trust by the person\nwith whom such deposit or advance shall be made, until repaid or applied\nfor the use or rental of the personal property, or annually paid to the\nlessee making the deposit of security money.\n 1-b. This section shall not be applicable to any advance payment of\nmoney under or with respect to any contract for the use or rental of\npersonal property that, in accordance with the terms applicable to such\npayment, either (a) is not revocable by the person making such payment\nand is not otherwise subject to being returned or refunded to such\nperson, or (b) otherwise satisfies or discharges an equivalent liability\nunder such contract when such payment is made, whether or not such\nliability is otherwise then due and payable under the terms of such\ncontract.\n 1-c. This section shall apply to money deposited or advanced on\ncontracts for the use or rental of personal property as security for\nperformance of the contract or to be applied to payments upon such\ncontract when due, only if (a) such contract is governed by the laws of\nthis state as the result of a choice of law provision in such contract,\nin accordance with section 1--301 of the uniform commercial code\n(subject to the limitations on choice of law by the parties to a\nconsumer lease under section 2-A-106 of the uniform commercial code), or\nsuch contract is otherwise governed by the laws of this state in\naccordance with applicable conflict of laws rules, and (b) the lessee\nunder such contract is located within this state, within the meaning of\nthe uniform commercial code (with respect to the location of debtors),\nexcept that a foreign air carrier under the Federal Aviation Act of\n1958, as amended, shall not be deemed located in this state solely as a\nresult of having a designated office of an agent upon whom service of\nprocess may be made located in this state.\n 2. Any provision of a contract whereby a person who has deposited or\nadvanced money on a contract for the use or rental of personal property\nas security for the performance of the contract waives any provision of\nthis section is absolutely void.\n 3. This section shall not be applicable to any deposit or advance of\nmoney made in connection with the borrowing of securities for any lawful\npurpose.\n