The law's restriction upon a landlord's treatment of a rental security deposit is recognized as a firm and fixed feature of New York landlord-tenant relations (1 Dolan, Rasch's Landlord and Tenant—Summary Proceedings § 13:27 [Deposit as trust fund], at 591 [4th ed] ["provision of the General Obligations Law requiring security deposits to be placed in a trust account is part of a lease contract as if it had been actually written into it"]). Where the landlord abides by the law, the deposit provides security to the landlord against a breach of the lease (Glass v Janbach Props., 73 AD2d 106, 108-109 [2d Dept 1980] [the security deposit law "should not serve to obscure the basic nature of a security deposit. A landlord requires such a deposit, although still the property of the tenant, to attain the status of a protected creditor should the tenant breach the lease" and to serve as "adequate protection should the finances of a tenant falter"]).
However, just as surely, if the landlord fails to segregate properly a security deposit, or mingles it with personal funds, the law views such as an illegal conversion of the security deposit (Kelligrew v Lynch, 2 Misc 3d 135[A], 2004 NY Slip Op 50220[U], *2 [App Term, 1st Dept 2004]; LeRoy v Sayers, 217 AD2d 63 [1st Dept 1995]; Sommers v Timely Toys, Inc., 209 F2d 342 [2d Cir 1954]). In such a case, if the tenant has vacated the premises, the right to a refund is immediate and shall not be delayed or postponed until the resolution of a landlord's claim for some or all of the security deposit (LeRoy v Sayers, supra).[FN2]