Sec. 42-409. Security interest restricted. Security deposit.
Sec. 42-409. Security interest restricted. Security deposit. (a) Except as otherwise provided in subsection (b) of this section, a consumer lease or other record signed
by the lessee in connection with the lease may not provide for the creation of a security
interest in personal or real property of the lessee to secure the payment of obligations
arising from the lease. A security interest created in violation of this section is unenforceable, but does not otherwise affect the validity of the lease.
(b) A consumer lease may provide for:
(1) A security deposit, advance lease payment or other prepayment;
(2) A security interest in unearned insurance premiums or rebates of charges for a
contract for services, or a service contract, extended warranty or maintenance agreement
regarding the leased goods;
(3) A security interest in the proceeds or benefits of insurance, or of a contract for
services, service contract, extended warranty or maintenance agreement on the leased
goods, except to the extent the proceeds or benefits represent reimbursement to the
lessee for expenses incurred; and
(4) A security interest in an accession to the leased goods.
(c) This section does not preclude a holder from making a permissive filing of a
financing statement under article 9 of the Uniform Commercial Code.
(d) A holder is not required to pay interest on a security deposit, advance lease
payment or other prepayment, but is required, within two weeks after the application
of a security deposit, to account to the lessee in a record for the application of the security
deposit.
(P.A. 02-81, S. 20.)
History: P.A. 02-81 effective July 1, 2003.