Section 7-101. Money deposited or advanced for use or rental of personal property; waiver void

1. Whenever money shall be deposited or  advanced  on a contract for the use or rental of personal property as security for
  performance  of  the  contract  or  to  be applied to payments upon such
  contract 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  a  trust fund in the
  possession of the person with whom such deposit or advance shall be made
  and shall be deposited in a bank or  trust  company  and  shall  not  be
  mingled  with other funds or become an asset of such trustee, excepting,
  however, that such trust funds may be deposited with  other  funds  that
  have  been  deposited  or  advanced  to  the  trustee  as  security  for
  performance of a contract for the use or rental of personal property  or
  be  applied  to payments upon such contract when due. If the money being
  deposited or advanced is for the use or rental of personal property  and
  the  money  deposited or advanced is seven hundred fifty dollars or more
  and is for the use or rental of personal property for a period equal  to
  or greater than one hundred twenty days, the person receiving such money
  shall deposit it pursuant to the provisions of subdivision one-a of this
  section.
    1-a.  Whenever  the  money  so  deposited or advanced is seven hundred
  fifty dollars or more and is for the use or rental of personal  property
  for  a  period  equal  to  or  greater than one hundred twenty days, 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. Such person shall  not  be
  required  to  keep  the funds of the separate persons from whom security
  deposits or advances have been received in separate depository accounts,
  provided his books of account shall clearly show the allocation  of  the
  funds deposited in his general or special depository account. The person
  depositing  such  security  money  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  deducted  from  the
  interest earned on such security money from the banking organization and
  shall  be  in  lieu  of  all other administrative and custodial expenses
  relating to the security deposit or advance. The balance of the interest
  paid by the banking organization shall be the money of the lessee 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 personal property, or annually paid to the
  lessee making the deposit of security money.
    1-b. This section shall not be applicable to any  advance  payment  of
  money  under  or  with  respect to any contract for the use or rental of
  personal property that, in accordance with the terms applicable to  such
  payment,  either  (a) is not revocable by the person making such payment
  and is not otherwise subject to  being  returned  or  refunded  to  such
  person, or (b) otherwise satisfies or discharges an equivalent liability
  under  such  contract  when  such  payment  is made, whether or not such
  liability is otherwise then due and payable  under  the  terms  of  such
  contract.
    1-c.  This  section  shall  apply  to  money  deposited or advanced on
  contracts for the use or rental of personal  property  as  security  for
  performance  of  the  contract  or  to  be applied to payments upon such
  contract when due, only if (a) such contract is governed by the laws  of
  this  state as the result of a choice of law provision in such contract,
  in accordance with section 1-105 of the uniform commercial code (subject

  to the limitations on choice of law by the parties to a  consumer  lease
  under  section 2-A-106 of the uniform commercial code), or such contract
  is otherwise governed by the laws  of  this  state  in  accordance  with
  applicable  conflict  of  laws  rules,  and  (b)  the  lessee under such
  contract is located within this state, within the meaning of the uniform
  commercial code (with respect to the location of debtors), except that a
  foreign air carrier under the Federal Aviation Act of 1958, as  amended,
  shall not be deemed located in this state solely as a result of having a
  designated  office  of an agent upon whom service of process may be made
  located in this state.
    2. Any provision of a contract whereby a person who has  deposited  or
  advanced  money on a contract for the use or rental of personal property
  as security for the performance of the contract waives any provision  of
  this section is absolutely void.
    3.  This  section shall not be applicable to any deposit or advance of
  money made in connection with the borrowing of securities for any lawful
  purpose.