§ 338 — Security interest prohibited

§ 338. Security interest prohibited. 1. No retail lease agreement, or\nany other agreement executed by the lessee in connection therewith,\nshall provide for the creation of a security interest in any personal or\nreal property of the lessee to secure the payment of the debt arising\nfrom the lease. This prohibition shall not apply to: (a) the taking of\na security deposit, advance payment of rent or other prepayment by cash,\ncheck or similar means; (b) the retention or exercise by a banking\norganization of a right of set off; or (c) the retention of a security\ninterest in the proceeds, cancellation refunds or other rights of the\nlessee under any insurance, repair or service contract whose cost is\nincluded in the total monthly lease payment.\n 2. A security interest taken in violation of this section shall be\nvoid but shall not otherwise affect the validity of a retail lease\nagreement.\n