In this action, plaintiffs seek to recover a security deposit in the amount of $1,600 which they gave to defendant at the time they executed a lease for the rental of an apartment owned by defendant. Eight days after execution of the lease agreement, which was still prior to the commencement of the term of the lease, plaintiffs requested the return of their security deposit. Plaintiffs ultimately refused defendant's tender of a check for $664, which represented the [*2]balance of the security deposit after defendant's deduction of her advertising expenses and one-half month's rent (until a new tenant was obtained), and this action ensued. Defendant's response to written interrogatories and a notice to produce indicated that defendant had deposited plaintiffs' check for $1,600 into her personal bank account.
General Obligations Law § 7-103 (1) provides that a security deposit "shall continue to be the money of the person making such deposit . . . and shall be held in trust by the person with whom such deposit . . . shall be made and shall not be mingled with the personal moneys or become an asset of the person receiving the same." While
the statute does not provide any specific penalty or sanction for a landlord's commingling of a security deposit with personal funds, it has been held that the commingling of a security deposit with a landlord's personal funds is a conversion, which entitles a tenant to an immediate right of recovery (see LeRoy v Sayers, 217 AD2d 63 [1995]; Sommers v Timely Toys, 209 F2d 342 [1954]).