Connecticut General Statutes 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.
Terms Used In Connecticut General Statutes 42-409
- Contract: A legal written agreement that becomes binding when signed.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Source: OCC
(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.