HB 1336 — Relative to Regulated Conditional Deposits (Senate Commerce Committee Hearing)
Chairman: All right, good morning everyone, and welcome to the Committee on Commerce. We will get started on a beautiful rainy day. We have six bills to work through this morning, and the first couple are brought to us by Representative Alexander. I'd like to open the hearing on House Bill 1336 and invite the representative to join us.
Representative Joe Alexander (Goffstown, prime sponsor): Good morning. I always enjoy spending time in this committee, so thank you for having me again. For the record, my name is Representative Joe Alexander. I represent the town of Goffstown. I'm here to introduce HB 1336. I think it's a creative way to get individuals who don't otherwise have housing the ability to have housing.
This bill would create an alternative approval pathway for prospective renters who would otherwise be denied housing because they cannot meet standard screening criteria. The first goal is accomplished by creating a special class of security deposits called a Regulated Conditional Deposit, or RCD. An RCD is an incremental deposit of up to one month's rent that a tenant may offer to offset risks associated with qualification shortfalls such as poor credit history, eviction history, or income that is slightly too low. This creates a narrow exception to New Hampshire's standard one-month cap on security deposits, but only in cases where the applicant would otherwise be denied. The statutory conditions are designed to ensure reasonableness and avoid outcomes where supplying an RCD would stretch a household's finances beyond reasonable limits.
Many single-family rentals and owner-occupied properties are already exempt from deposit caps, but HB 1336 conditionally extends that principle to more types of housing in order to reduce denials while preserving existing limits for qualified applicants.
The second thing this bill does is expand the philanthropic capacity of security deposit assistance organizations by legalizing a circular flow of funds, allowing rental charities to manage their resources more like a revolving fund. This second goal arose in response to concerns raised by rental charities during our public hearing in the housing committee. Some security deposit assistance organizations expressed concerns that tenants who secure conditional approval using an RCD might request higher levels of financial assistance, which could strain program resources. The feedback revealed an opportunity to increase the capacity of these organizations by enabling a circular flow of funds between housing providers and rental charities.
Under current law, it is illegal for a landlord to refund a security deposit to anyone other than a tenant, even if the deposit originally came from a third party such as a family member or charity. As a result, security deposit assistance is currently a one-way flow of cash. HB 1336 makes a small change with a significant impact: it legalizes deposit fund refunds to third-party payers, provided everyone agrees to the arrangement upfront. Once this bill passes, every security deposit assistance organization in the state will have the option to manage charitable funds more like a revolving loan fund. The process is simple: if the landlord and tenant are informed at the time the assistance is given that the refund should return to the charity, the landlord may issue the refund accordingly.
I will say that the housing committee has had some great bipartisan work going on. This is one of the bills where I entrusted the housing provider community to work with the tenants' rights advocate organizations. Initially, New Hampshire Legal Assistance was opposed to this bill, and now they're neutral on the bill, and the Property Owners Association supports the bill. This is a careful compromise that would allow people who don't otherwise have access to housing an opportunity to get housing. For that reason, I'm asking you to vote ought to pass.
Senator Reardon (question to Rep. Alexander): On page two, lines six and seven, one of the criteria where somebody could require a regulated conditional deposit is that they're unable to verify the present landlord reference and the most recent prior reference. Does that cover a lot of people that might not fit in the criteria of the rest of the bill?
Rep. Alexander: I think it could. I don't have extreme heartburn if that's something you aren't comfortable with.
Senator Reardon (follow-up): I ask because on lines 16 through 19, it means an otherwise eligible tenant — because the landlord, and we don't say what kind of efforts the landlord has to make there to reach — could ask for a rescreening and pay another fee for that. So isn't this just a possibility that a landlord that's lax about trying to contact references just generates more fees for that tenant?
Rep. Alexander: I believe so, Senator, but I believe there are also protections in cases of rescreening. I think that most landlords, if they already pay one application fee for a unit, they're not going to charge another one for a rescreening. In cases where they ask for an application fee, they have to return anything other than the actual cost of the application fee, including background check and administrative costs.
Senator Reardon (further follow-up): This line does say disclosing any fees for rescreening. So this allows a landlord who has a marginal tenant to require an additional security deposit. Is there any guarantee in here for the tenant if they offered the landlord a second security deposit?
Rep. Alexander: I'm going to defer the question. There's a landlord — legal assistance is here, as well as the landlord community here — to answer questions for you.
Senator Fenton (question to Rep. Alexander): Just reading through this — if someone doesn't meet that standard criteria because they're, let's say, financially unstable, do you think requiring more money up front might actually hurt their chances of getting housing?
Rep. Alexander: That's why the second part of this bill comes into play. It would allow charitable organizations to step in at that point and maybe provide that additional security deposit, the RCD. There's language in the bill — and somebody can correct me if I'm wrong — but basically it says that after a certain amount of time of paying rent, the landlord would have to give that money back. So basically it would allow the money up front, but if the tenant pays rent on time for a certain amount of time, then that RCD goes away and gets paid back.

Nick Norman (Apartment Association of NH / NH Rental Property Owners Association): Thank you once again for the opportunity to speak. For the record, my name is Nick Norman. I advocate for housing providers on legislative committees for the Apartment Association of New Hampshire and New Hampshire Rental Property Owners Association. In our membership, we communicate with about 3,500 landlords across the state — we have a pretty wide reach.
We worked diligently — hours and hours — on this bill with New Hampshire Legal Assistance. It's a very good compromise. All sides have agreed to this framework. The bill primarily is for the purpose of providing tenants who are marginally qualified — that presently often don't meet landlords' approval criteria — to have another mechanism where they can reduce the risk to a landlord so that landlord could accept them for housing. That's the primary focus of the bill.
There was concern from the beginning that this should not become a means of the market standardizing to two months' security deposit. So there are careful restrictions put into the bill that this extra RCD is only applicable in certain defined situations, which are delineated in the bill. In fact, they're delineated so tightly that it reduces significantly the use of the RCD, and that was part of the compromise in the work we did with New Hampshire Legal Assistance.
We strategically chose the name "Regulated Conditional Deposit," and we would request that anyone referring to this doesn't call it a "second month security deposit" but a regulated conditional deposit, because that's what it is. It's named that way so that when somebody hears it, they say, "Hmm, regulated — I better check that out so I know the rules on using this. Conditional — well, that means I can't always use it; there are conditions for using it. Deposit — security deposit law has extremely stiff penalties for misuse," which are all still in play in this bill. All the penalties for misuse of the security deposit still apply.
In the bill, we put in a standardized form that can be used when someone uses an RCD, and in that form it delineates all parts of the statute that define these parameters so there could be no misunderstanding — it's all documented up front. We put in an incentive for people to use that form: if they're using it, then you're complying with the regulations about notice. There's a strong bias to use the form.
It does allow for third-party payers to get the money back that they have put forward, so those agencies which are supporting tenants now could shift all of their contributions into becoming revolving loan funds. We think it will help support more agencies for providing security deposits. It was also carefully written so that if a landlord and a tenant don't want to use this extra feature, they can just go about business as normal. There's nothing in here that puts additional duties for someone that just wants to continue operating business like they always have been.
You look into legislation year after year and then finally you notice something. So there's also a fix in here. The way New Hampshire law is presently written, it does not allow a tenant to prepay rent. So while we were here, we fixed that as well.
One thing that might get overlooked: for a landlord to use this new feature, they're going to have to be very tight with their approval criteria. If you're using approval criteria and you're bending it this way and that way for different situations, you'd very likely be setting yourself up for a discrimination lawsuit. So to use this procedure is going to require landlords to have written procedures, follow their procedures, and not randomly say "yes I'm doing it for you, no I'm not doing it for you."
I'd be very happy to take questions. The first thing I would answer is — someone talked about page two, lines six and seven, "present landlord reference and most recent prior reference" — that's really good for the first-time renter who has no landlord references. It's very hard for them to get approved. It could be used for someone who was a homeowner for years and has no landlord references. It could be used for someone who's been with family for many years but rented so long ago that the landlord reference is no longer available. Many of these provisions are very supportive to tenants.
Senator Reardon (question to Nick Norman): Page five, starting on line nine through line 13 — in the past there was a prohibition in New Hampshire about taking advanced rental payments. Do I read this correctly that if I have a six-month lease, my landlord could require me to pay all six months' rent up front?
Nick Norman: Sort of yes and no. Several years ago there was a bill that came through that was targeted for college students. College students often get financial aid packages and they'll get many months' rent at a time. So the bill was written so that not so much a landlord could require "for this person you're going to pay 6 months in advance" — it's that a lease could be written that the rent has to be paid six months at a time, or three months at a time, or whatever interval you choose. But interestingly enough, not two months at a time. So no, it couldn't require, but you could have a lease written that that's the payment plan.
Senator Reardon (follow-up): Can you clarify why those two things are different — having a payment plan that says I pay three months at a time or six months at a time, and requiring six months' rent up front?
Nick Norman: If you have a lease that's a yearly lease paid monthly, the landlord could not require six months to be paid in advance. But you could set up a lease that you pay six months at a time in advance.
Senator [unnamed] (question to Nick Norman): Page one, line 14 — the applicant's combined verifiable household gross income from lawful sources for any size household exceeds 350% of the federal poverty guidelines for a household size of two. I'm confused — why is the benchmark 350% of the federal guidelines for household size of two regardless of size? What is it for a family of four or a family of one?
Nick Norman: This provision, subparagraph B, might have been one of the provisions that spent the most amount of time being defined. It defines a level of income. I sent out yesterday to everyone through email a very thorough analysis. In the present numbers of federal poverty guidelines, this comes out to something in the range of $75,000 of income, and it was chosen as an amount not based on family size but just an amount. The idea behind that was people were concerned that tenants of low income would be more often targeted to require two months' security deposit. So it was desired from the tenant advocacy side that the RCD would not be allowed for low-income tenants because they wouldn't, in many cases, have the financial means to pay it, and there was a concern it would shut them out of housing. So a number was picked. It's not so much that it's a family of two — it's to get a number in a way that's definable that changes with time.
Senator [unnamed] (follow-up): So what is the benchmark then for a family of four?
Nick Norman: I'd have to look that up. There's no benchmark for a family of four. We're singling out a family of two to define a number of income. Presently the income is around $75,000. When you look at a family of two on that chart, you get an income of $75,000. So the point of the bill is not to say certain levels of households, but to get a number that can be found in a federal document that you can look up each year.

Nick Taylor (Director, Housing Action New Hampshire): Good morning, Mr. Chairman, members of the committee. I'm Nick Taylor, the director of Housing Action New Hampshire. We are here in opposition to this bill. We do really appreciate all the work and the intent behind it — all the work that went in from the parties working on the amendment — but disagree with the general premise behind what we're trying to solve.
We believe that if you're trying to give access to more folks to housing, the way to do that is to build more housing so that they have the options, not try to put our finger on the scale of making one group of folks more desirable or less risky to rent to, especially when we're thinking about not the neediest group of folks. While this is well-intentioned, we think we need to be really careful about non-supply-side solutions that are not aimed at the most needy, the lowest-income folks in our communities. That's what this is doing — this is taking that scarce, limited resource of housing availability and trying to take one group of folks, the folks that have the money to put down a conditional deposit, make them less risky to rent to. And that is creating another class of folks who, if you're the lowest income, makes you even further less desirable to rent to because you don't have the money upfront.
That could create this race to the bottom where if you're the lowest income, you don't have the money to put forward to rent, and if you're the next tier up that doesn't qualify for this, then maybe you're asked to prepay multiple months in advance to make yourself more competitive with someone who can put down money for the conditional deposit.
A lot of the analysis of renters here in New Hampshire is that folks do not have that money to put up front. Only about one in four New Hampshire households have $2,000 in savings, according to a recent report from the New Hampshire Fiscal Policy Institute. When you're talking about the first month's rent, the deposit, and the conditional deposit, when the median rent in New Hampshire is about $2,000, that's $6,000 upfront for folks. It may work for a college student that has family that can put money to help them, who doesn't have a prior landlord, who doesn't have a ton of credit history — but when you're talking about members of the workforce, we don't think this is a feasible path forward.
While we appreciated the work around the nonprofits that are providing down payment assistance and trying to allow for that direct reimbursement, what you're still doing is creating a higher threshold — more money that folks need to put down. If you're an organization helping with down payment assistance and you had $4,000 and could help two people with a $2,000 deposit, now you're helping one person with a $4,000 deposit. Whether that gets reimbursed directly to you or not, that means you're still helping one fewer person with that money.
We do think there are other solutions to reach this population. Obviously building more housing is the first one, but there are other organizations — Granite United Way's Key Connect program is helping landlords with making investments in their properties, getting things up to code if they're having to rent to HUD-related programs. Other programs are trying to incentivize landlords, making it easier to screen tenants, providing other supportive services. We appreciate the work that went into this, but we don't think this is a feasible solution. We don't think it will help the population it's trying to help.
Senator Reardon (question to Nick Taylor): Has the vacancy rate changed? Are landlords having a hard time getting applicants for apartments, so that they might be looking for riskier tenants?
Nick Taylor: Everything we've heard is that there still is incredible demand for each apartment vacancy that comes open, especially things that are more affordable for folks. When you're weighing these two tenants against each other, you're going to have a lot of options. There's going to be a very competitive environment as it is.

Todd Marsh (Welfare Director, City of Rochester; President, NH Local Welfare Administrators Association): Good morning, Mr. Chair and members of the committee. My name is Todd Marsh. I serve as the welfare director for the city of Rochester. I am appearing today as president of the New Hampshire Local Welfare Association on behalf of our board and membership throughout the state, which includes larger cities and many small towns, including rural areas.
I am here to respectfully oppose HB 1336 as currently written. In our daily work, we see the on-the-ground reality of the housing challenge. We recognize the perspective of our landlord friends, including smaller owners, who are looking for financial risk mitigation. If the intent is to encourage housing for New Hampshire residents who might otherwise be bypassed due to credit or background issues, we understand that goal. Risk mitigation is a valid policy conversation, and multi-pronged approaches are needed.
Our board also recognizes and is mindful that the current amendment is a result of significant negotiation involving diverse interests. We want to be sensitive to that, as collaborative efforts can lead to uncommon progress. However, from our specific vantage point as municipal welfare administrators, we believe serious consequences remain.
With rents at historic highs, we are deeply concerned that these regulated conditional deposits could become the default rather than a targeted exception. For many working families, coming up with first month's rent and one month's security deposit is already a mountain to climb. Adding a second security deposit — or conditional security deposit — would be an additional challenge for them.
From our municipal perspective, we anticipate that this will result in an increased demand on local welfare to bridge the new financial gap. This essentially shifts the cost of risk mitigation from the private sector onto the local property taxpayer — additional costs often for households that could have managed a standard move-in on their own but simply cannot overcome the barrier of a second deposit, albeit conditional and well-intended.
Because of these unintended consequences, our association recommends a vote of inexpedient to legislate. However, if this committee still seeks to move this bill forward, our municipal welfare association respectfully asks that you consider two points of taxpayer protection:
First, we ask that municipalities be exempt from providing this regulated conditional security deposit. Our request is that municipal assistance remain capped at the traditional one-month limit. This maintains consistency for municipal budgets and ensures that the taxpayer is not tasked with providing a double security deposit.
Second, we seek to ensure proper fiscal stewardship of public funds. We would hope to see a clear and legally structured mechanism where any security deposits paid by a municipality, less any lawful deductions, are returned directly to that municipality upon termination of tenancy. I recognize there is some language in the negotiation regarding third parties; however, we believe further clarification could be helpful legally. The Local Welfare Association will be providing specific language considerations to this committee shortly. We intend for these suggestions to be mindful of the already negotiated language while ensuring necessary protections for the municipal taxpayer.
Today reminds me of a quote: if it looks like a duck, swims like a duck, quacks like a duck, then it's probably a duck. Regulated conditional deposits are security deposits, albeit structured differently and in another name, and we admit with good intentions. We just believe it needs more work and more clarification.
Bernadette Tero (Welfare Director, Town of Pittsfield; NH Local Welfare Association board): My name is Bernadette Tero. I'm the welfare director for the town of Pittsfield, New Hampshire. I'm also on the New Hampshire Local Welfare Association board.
What I would like to put out there is that from a local welfare perspective, in my town in particular, 59.8% of the people in our town are renters. That leaves 40.2% of our properties being lived in and managed by actual taxpayers. We have recently, over the last few years, had a couple of really big corporations purchase 15 very large apartment buildings in town, and since they've come into town, it has been very difficult to have those regular conversations that we used to have with the landlords. That has turned into a difficulty for municipalities, especially for us, because when we had conversations with the landlords, we knew where our tenants stood. Now we don't know until it's almost too late.
If we are required to pay additional security deposits — conditional, you know, whatever you want to call it — our budgets are going to be destroyed. 59.8% of the people in my town could be coming to ask for additional money to be able to find an apartment, and my budget can't handle that. We're in our third year of default budget. It's very expensive to run a town, and putting this back on taxpayers is going to be really tough for us.
In addition, there's talk about the charities that are out there that can help out. They're fewer and fewer. I've been a welfare director since 1998, and over the last eight years the funding that we had access to has diminished dramatically. So I would just like to remind you that in theory it might sound good, but in practice it's going to be a tough situation for many cities and towns.
Senator Reardon (question to Todd Marsh): If this was modified so that the town was in on a one-security-deposit deal as opposed to a two-security-deposit deal, and a tenant defaulted in the second month — let's say a nonprofit has done the second security deposit — is it your expectation that you would get the leftover money back, or that the nonprofit, the last in who took the risk, would get money back? Let's say the tenant pays the first month's rent, you pay the security deposit, a nonprofit pays the third one, they default in month two and abandon the apartment. There's a security deposit sitting out there — are you entitled to that, or the nonprofit?
Todd Marsh: I think our expectation is that the municipality would receive the money back if it is a security deposit, because we know what security deposits are for. Under the current RSA 165, people receiving assistance are not to receive cash from municipalities. Now, for security deposits, they are not necessarily receiving direct cash from the municipality, but they can receive cash indirectly at the time of exit from the apartment. It is not impossible, however it is challenging to track from a municipality perspective when tenants come and go. We would probably need to rely on the good faith of our landlord friends to inform us of that.
Senator Reardon (follow-up): Under this scheme of conditional deposits, a tenant that proves themselves that they can pay the rent is able to get that security deposit back at some point in their tenancy. So would you be tracking it so you would get that back?
Todd Marsh: I think if the tenant pays the conditional regulated security deposit, then I believe they should be entitled to that back, not the municipality. If the municipality pays, they should be receiving that money back for the taxpayers of that community.
Senator Reardon (further follow-up): My understanding is that you're willing to be the first security deposit; you don't want to be the conditional security deposit, which is the risky position. So if that's coming back, you believe the person that's taken the greatest risk — the second security deposit — doesn't get that money back. You do.
Todd Marsh: My initial thought is that if we are upfront paying the security deposit and we're clear on that, then that payment would return back to the city. If it's clear that the resident is paying for the conditional security deposit or some nonprofit, that would be up to the nonprofit as far as how they want to navigate that. But if the nonprofit was not involved and the tenant is putting money into this, I think they should get that money back, but we would need to track it. We would need to verify. There's more to it than some may think — not impossible, but it would create some challenges. So you'd have to set up a system. That's why we're asking — I think there would need to be more clarification. Our board isn't there yet. I need that permission from our board to give you language.
Senator Fenton (question to Bernadette Tero): You made an excellent point. I'm reading through this language in the bill, and on page two, line six: "the prospective landlord was unable to verify the present landlord references and the most recent prior landlord reference." So why should the applicant be penalized because a prior landlord or property owner didn't respond?
Bernadette Tero: They shouldn't be.

Jennifer Chisholm (Executive Director, NH Coalition to End Homelessness): Good morning. Thank you for the opportunity to speak to this. My name is Jennifer Chisholm, and I am the executive director of New Hampshire Coalition to End Homelessness. The coalition absolutely appreciates the work that has been put into this bill, and we still have several concerns about it, and so we are in opposition to it.
You'll see in my written testimony that I included the story of a New Hampshire mom named Adrienne, who is a mom that HB 1336 would really create additional barriers for. She's a mom who has a master's degree, she has a career, she has a great rental history, but unfortunately lives in a really expensive part of the state, and so she could not find an apartment that was less than 50% of her monthly income. We're concerned about working families in New Hampshire as well.
What I wanted to talk about was the impact that it would have on New Hampshire's service provider safety net. That safety net already cannot keep up with the demand for security deposits in the state. The Fair Housing Advisory Council in New Hampshire had identified this as an issue last year, and so the Coalition partnered to help convene in December 19 service providers from 10 agencies across New Hampshire to talk about the issue and help try to figure out some solutions and troubleshoot.
The current available funds don't meet the current demand. Agencies were talking about how they were running out of money several months after it was released to them. In fact, one agency was talking about how they received their funds in July and by September they had to put applications on pause because they had either spent the money or it was already promised. Others reported they were having to pace their money, limiting applications each month so that they could have some funding across the year. And so that's with one security deposit for each family that's renting who needs that.
In 2025, New Hampshire 211 reported they had over a thousand calls from New Hampshire residents needing help with that one month's security deposit. Doubling the amount of that security deposit not only is going to impact vulnerable families, but it's also going to put the service providers in even more of a bind trying to help as many people as they can. We are concerned that due to that, HB 1336 will contribute to homelessness in New Hampshire, including families who can't afford that second secured month's worth of security deposit and end up having to double up with friends and family, affecting the children and all of that.
Thank you for your consideration of this testimony, and am open to questions.

Chairman: Is there anyone else who would like to speak on House Bill 1336? Seeing none, we're going to close the hearing on House Bill 1336, and I'm going to refer to our subcommittee on housing so we can give this a deeper look and see what makes sense.