I know NYS does not typically permit MSDs and articles online reference a cap of $749 but does any one have the citation on the exact law or regulation that limits this?
What, and where, have you already searched for the answer?
There is a specific law, there is case law, and there is a FAQ on the NYAG’s website - the latter will show up on LH if you search (vhooloo posted it).
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I’ve seen the FAQ and motor vehicle leasing act but do not see any references in there. Sorry if I’m asking to be spoon fed but could you point me to the exactvlanguage?
Why I asked where you searched to begin with.
If you look at Turner v GMAC (and obviously if you have Westlaw or LN it’s easier to search)
Prior to its recent amendment, GOL § 7-101 permitted security deposits to be placed in non-interest bearing accounts. See Stuarco, Inc. v. Slafbro Realty Corp. , 289 N.Y.S.2d 883, 885 (App. Div. 1968). The New York legislature amended Section 7-101 in 1997; it now provides that security deposits of $750 or more pursuant to leases of at least 120 days in length must be placed in interest-bearing accounts but expressly permits the commingling of multiple security deposits in a single trust account. See N.Y. Gen. Oblig. Law § 7-101.1-a (McKinney 1999).
The captives cannot collect MSDs in NY over $750 unless each set of deposits is placed into its own interest-bearing escrow account.
The actual lawyers (@Ashleigh) are welcome to chime in anytime if I misspoke or missed anything.
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Thank you! So NY dealers won’t do it because they have to segregate each security deposit into a separate.
The dealer has nothing to do with this, it’s the captive bank.
Understood thank you
Just for completeness, it isn’t that the banks don’t offer MSDs in NY because they are incapable of setting up separate accounts.
Paying security deposits reduces the banks risk, and in exchange for your upfront deposit, which they earn interest on, they offer you a discount on the MF.
If your upfront deposit has to go into separate escrow accounts where the depositor gets the interest, why would the lender go through the extra overhead and management? They get no benefit and more aggravation. The risk is already priced into the MF for programs without MSDs.
Different banks interpret it differently (e.g. can NY residence deposit MSDs if they lease out of state?) - but in the case where it’s allowed, both sides still reap the benefit.
Let’s not propagate the myth that AP is an actual lawyer.
Retired Bear terms
Rereading it, doesn’t it say all deposits can be commingled in one account as long as records I kept? I guess parsing out of interest is the headache? It looks like MASS has the same requirements but Mercedes does MSDs there? Am I missing something?
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