This section adds a new section to an existing chapter 59.18. Here is the modified chapter for context.
Notwithstanding any other provision of law, if a landlord chooses to waive a security deposit requirement, and a tenant agrees to instead pay a fee in lieu of a security deposit, the landlord shall:
Ensure that the fee in lieu of a security deposit is strictly optional for the tenant, and the tenant may choose to pay a full security deposit rather than a fee in lieu of a security deposit;
Not use a prospective tenant's choice to pay a fee in lieu of a security deposit or a traditional security deposit as a criterion in the determination of whether to approve an application for occupancy;
If choosing to offer the fee in lieu of a security deposit option, offer it to every prospective tenant whose application for occupancy has been approved, without further regard to income, race, gender, disability, sexual orientation, immigration status, size of household, or credit score following such approval; and
Allow any tenant that agrees to pay a fee in lieu of a security deposit, to opt out of the continuing fee in lieu of a security deposit obligation upon full payment of the security deposit that is otherwise in effect for the tenant's apartment on the day of the opt out.
Any fee in lieu of a security deposit:
May be entirely or partially nonrefundable, so long as this is disclosed in the lease and separately acknowledged by the tenant;
May be utilized by the landlord to purchase coverage for unpaid rent or unit damage from a third-party insurer, so long as the insurer is licensed by the office of the insurance commissioner;
May be a recurring monthly fee, or payable upon any schedule and in any amount that the landlord and tenant choose; and
Shall not be considered by a court, arbitrator, mediator, or any other dispute resolution adjudicator to be a security deposit or governed by state or local codes governing security deposits.