Section 143-C. Avoidance of abuses in connection with rent security deposits

1. Whenever a landlord requires that he  be  secured  against
  non-payment  of  rent or for damages as a condition to renting a housing
  accommodation to a  recipient  of  public  assistance,  a  local  social
  services  official  may  in  accordance  with  the  regulations  of  the
  department secure the landlord by either of the following means  at  the
  option of the local social services official:
    (a)  By means of an appropriate agreement between the landlord and the
  social services official, or
    (b) By depositing money in an escrow account, not under the control of
  the landlord or his agent, subject to the terms  and  conditions  of  an
  agreement  between the landlord and the social services official in such
  form as the department may require or approve  provided,  however,  that
  this  option  shall  not be used in instances where recipients reside in
  public housing.
    2. Except as expressly provided in subdivision three of this  section,
  it shall be against the public policy of the state for a social services
  official  to  pay  money  to a landlord to be held as a security deposit
  against the non-payment of rent or for damages by  a  public  assistance
  recipient,  or  to  issue  a  grant  to a recipient of public assistance
  therefor.
    3. When, however, in  the  judgment  of  a  social  services  official
  housing  accommodations  available in a particular area are insufficient
  to properly accommodate recipients  of  public  assistance  in  need  of
  housing, and in order to secure such housing it is essential that he pay
  money  to  landlords  to  be  held  as  security  deposits  against  the
  non-payment of rent or for damages by public assistance  recipients,  or
  to issue grants to recipients of public assistance therefor, such social
  services  official  may  pay or furnish funds for such security deposits
  until sufficient housing accommodations are available in the  particular
  area  to properly accommodate recipients of public assistance in need of
  housing. Social services officials shall not pay or furnish  such  funds
  in  instances  where  recipients  reside  in public housing.   Landlords
  receiving such security deposits shall comply  with  the  provisions  of
  article  seven  of  the  general  obligations  law.  Such  cash security
  deposits shall be subject to assignment to  the  local  social  services
  official  by  the  recipients  of  public assistance or care. Any social
  services official paying or furnishing funds for  security  deposits  in
  accordance  with  the provisions of this subdivision shall make diligent
  effort to recover such payments or funds from a  recipient  landlord  as
  allowed by law.
    4.  This  section  shall apply to federally-aided categories of public
  assistance except to the extent prohibited by  applicable  federal  laws
  and regulations.
    5.  This  section  shall  apply to recipients of supplemental security
  income benefits or additional state  payments,  as  defined  in  section
  three  hundred  of  this  chapter,  and  such  persons  shall  be deemed
  recipients of public assistance for the purposes of this section.