Finally, as an alternative means of recovering the security deposit in the event its contract claim fails (which, as noted, it does), Urban contends that Royal's alleged breach of General Obligations Law § 7-103 is an independent basis for awarding it the security deposit. Section 7-103 applies to all money "deposited or advanced on a contract or license agreement for the use or rental of real property as security for performance of the contract or agreement or to be applied to payments upon such contract or agreement when due." (General Obligations Law § 7-103 [1].) Urban contends that Royal violated two of the requirements set forth in section 7-103.
First, Royal allegedly violated section 7-103 (1) by commingling the security deposit with other funds. (See 23 E. 39th St. Mgt. Corp. v 23 E. 39th St. Dev., LLC, 134 AD3d 629, 631 [1st Dept 2015] [section 7-103 (1) "prohibits landlords from commingling security deposits with their own funds. Violation of the statute gives rise to an action in conversion and the right to immediate return of the funds"], citing Tappan Golf Dr. Range, Inc. v Tappan Prop., Inc., 68 AD3d 440 [1st Dept 2009].) Landlords who commingle funds in violation of section 7-103 "forfeit[ ] any right [they] had to avail [themselves] of the security deposit ' "for any purpose," ' entitling plaintiff to its 'immediate' return notwithstanding that plaintiff may itself have breached the lease." (Dan Klores Assoc. v Abramoff, 288 AD2d 121, 122 [1st Dept 2001], quoting LeRoy v Sayers, 217 AD2d 63, 68 [1st Dept 1995].) Urban's commingling allegation, however, has been refuted by Royal. (See Doc No. 12 [bank statement showing security deposit was segregated].)[FN10]