New York Security Deposit Law

by ECL Writer
New York Security Deposit Law

New York is one of the most vibrant and populous states in the United States, attracting people from all over the world to its bustling cities and charming towns. If you’re planning to rent a property in New York, you’ll need to be familiar with the state’s security deposit law. This law governs how landlords can handle security deposits and what they can and can’t do with them. The law is designed to protect tenants from unfair practices and ensure that they receive their deposit back in full when they move out of a rental property. In this article, Eastcoastlaws.com will take a closer look at the New York security deposit law, what it entails, and what tenants need to know to protect their rights and interests. We’ll also discuss some of the common issues that arise between landlords and tenants regarding security deposits and how to resolve them. Whether you’re a first-time renter in New York or an experienced tenant, understanding the state’s security deposit law is essential to a smooth and hassle-free renting experience.

NYC Security Deposit Law

New York State law requires landlords to collect security deposits from tenants as a way to protect against damage to the rental property or failure to pay rent. The security deposit is typically returned to the tenant at the end of the lease term, assuming there are no damages to the property and the tenant has fulfilled all of their obligations under the lease agreement.

The New York State Security Deposit Law outlines the specific requirements that landlords must follow when collecting and returning security deposits. Under this law, landlords are required to provide tenants with a written receipt when they collect a security deposit. This receipt must include the amount of the deposit, the name of the tenant, the date the deposit was received, and a description of the property being rented.

The security deposit must be held in an escrow account, which means that the landlord cannot use the funds for any purpose other than to cover damages to the rental property or unpaid rent. The account must be held in a New York State bank, trust company, or other financial institution, and the landlord must provide the tenant with the name and address of the institution where the account is held.

When the lease term ends, the landlord must return the security deposit to the tenant within a certain timeframe. If the tenant has fulfilled all of their obligations under the lease agreement and there are no damages to the property, the landlord must return the full amount of the security deposit within 14 days of the tenant’s move-out date. If there are damages to the property or unpaid rent, the landlord may deduct the cost of repairs or unpaid rent from the security deposit and return the remaining amount to the tenant.

If the landlord fails to return the security deposit within the required timeframe, the tenant may file a complaint with the New York State Attorney General’s office or take legal action against the landlord. If the tenant wins their case, the landlord may be required to pay the tenant three times the amount of the security deposit, as well as any legal fees incurred by the tenant.

It’s important for tenants to understand their rights under the New York State Security Deposit Law and to keep all documentation related to their rental property, including their lease agreement and security deposit receipt. If a tenant has concerns about their security deposit or the landlord’s handling of it, they should consult with an attorney or reach out to a tenant advocacy organization for assistance.

Does New York State Law Limit How Much A Landlord Can Charge A Tenant For A Security Deposit?

Yes, New York state law limits how much a landlord can charge a tenant for a security deposit. As of September 2021, the maximum amount a landlord can charge for a security deposit in New York is the equivalent of one month’s rent for an unfurnished rental unit, or the equivalent of two months’ rent for a furnished rental unit.

For example, if the monthly rent for an unfurnished rental unit is $1,500, the maximum amount the landlord can charge for the security deposit is $1,500. If the monthly rent for a furnished rental unit is $2,000, the maximum amount the landlord can charge for the security deposit is $4,000 (the equivalent of two months’ rent).

It’s important to note that the security deposit is separate from other fees that may be charged by the landlord, such as a pet deposit or a cleaning fee. These fees are typically non-refundable and are not subject to the same limitations as security deposits.

Keep in mind that some cities in New York, have their own local laws regarding security deposits that may differ from state law. For example, as of September 2021, landlords in New York City are limited to charging the equivalent of one month’s rent for security deposits, regardless of whether the rental unit is furnished or unfurnished.  (N.Y. Gen. Oblig. Law § 7-108(1-a) (2022).)

The following table outlines the specifics of New York security deposit laws.

Code SectionsNY Real Property Law §§220-238NY General Obligation Law §§7-103 – 7-109
Security Deposit LimitsNew York security deposit laws do not state a limit that landlords can charge for security deposits. According to New York’s Attorney General, security deposits are usually one month’s rent. If rent is later legally increased, landlords can also request a similar increase in the security deposit.
Landlord’s Handling of the Security DepositLandlords must hold tenants’ security deposits in trusts. If a landlord owns a property that holds six or more tenants, the deposit must be held in an interest bearing account by a banking organization. Any commingling of the security deposit with the landlord’s personal funds is prohibited.
Interest on DepositTenants are entitled to the majority of the interest that their security deposit earns during tenancy. However, a landlord may collect a 1% administration fee for handling the deposit.
Returning Security DepositLandlords must return the entire security deposit plus any interest earned, less any lawful deduction to the tenant within a reasonable time after the end of the lease.
Lawful Deduction by the LandlordsA landlord may deduct any reasonable cost of repairs beyond normal wear and tear, if the tenant damages the apartment, or a reimbursement for any unpaid rent.

How Long Does A Landlord Have To Return A Security Deposit In New York?

In New York, a landlord is required to return a tenant’s security deposit within a certain timeframe after the tenant has moved out of the rental property. Under the New York State Security Deposit Law, if the tenant has fulfilled all of their obligations under the lease agreement and there are no damages to the property, the landlord must return the full amount of the security deposit within 14 days of the tenant’s move-out date. (N.Y. Gen. Oblig. Law § 7-108(e) (2022).)

If there are damages to the property or unpaid rent, the landlord may deduct the cost of repairs or unpaid rent from the security deposit and return the remaining amount to the tenant. In this case, the landlord must provide the tenant with an itemized statement detailing the deductions made from the security deposit and the reasons for those deductions.

If the landlord fails to return the security deposit within the required timeframe, the tenant may file a complaint with the New York State Attorney General’s office or take legal action against the landlord. If the tenant wins their case, the landlord may be required to pay the tenant three times the amount of the security deposit, as well as any legal fees incurred by the tenant.

It’s important for tenants to keep all documentation related to their rental property, including their lease agreement and security deposit receipt, and to communicate with their landlord about any concerns they may have regarding their security deposit. If a tenant has concerns about their security deposit or the landlord’s handling of it, they should consult with an attorney or reach out to a tenant advocacy organization for assistance.

Exceptions

Security deposits are capped at one month’s rent in New York, except in the following cases:

  • Communities for seniors with ongoing care.
  • Senior housing developments.
  • Adult care centers.
  • Assisted living providers.
  • Units that are covered by either the emergency housing rent control statute or the city rental and rehabilitation code.
  • Independent retirement homes that are not for profit.

What Happens If Landlord Does Not Return Security Deposit NYC?

If a landlord in New York City fails to return a tenant’s security deposit, the tenant has several options for recourse.

First, the tenant can send a demand letter to the landlord, requesting the return of the security deposit within a certain timeframe, such as 10 or 14 days. The letter should be sent via certified mail and should include a copy of the lease agreement, the security deposit receipt, and any other relevant documentation.

If the landlord fails to respond or return the security deposit within the specified timeframe, the tenant can file a complaint with the New York State Attorney General’s office or take legal action against the landlord in small claims court. In small claims court, the tenant can sue the landlord for the return of the security deposit, as well as any interest, penalties, and legal fees that may be awarded by the court.

It’s important to note that under New York State law if the landlord fails to return the security deposit within the required timeframe, the tenant may be entitled to additional damages, up to three times the amount of the security deposit. In addition, the landlord may be required to pay the tenant’s legal fees.

Tenants in New York City may also be able to seek assistance from the city’s Department of Housing Preservation and Development (HPD) or the New York State Division of Housing and Community Renewal (DHCR). These agencies may be able to provide mediation services or other forms of assistance to help resolve disputes between tenants and landlords.

Can A Landlord Ask For 2 month’s Security Deposit In NY?

Yes, under New York State law, a landlord can ask for up to two months’ rent as a security deposit if the rental unit is furnished. If the unit is unfurnished, the landlord can ask for up to one month’s rent as a security deposit.

However, in some cities in New York, such as New York City, there are additional laws that further limit the amount of security deposit that a landlord can require. In New York City, for example, landlords are limited to charging the equivalent of one month’s rent for security deposits, regardless of whether the rental unit is furnished or unfurnished.

It’s also worth noting that landlords in New York must comply with other laws related to security deposits, such as the requirement to return the security deposit to the tenant within a certain timeframe after the tenant has moved out, and to provide the tenant with an itemized statement of any deductions made from the security deposit.

If a landlord in New York is requesting a security deposit, it’s important for tenants to carefully review the lease agreement and to understand their rights under state and local laws. Tenants may want to consult with an attorney or a tenant advocacy organization for guidance on their specific situation.

What Can A Landlord Deduct From A Security Deposit In NYC?

In New York City, landlords can deduct certain expenses from a tenant’s security deposit if the tenant has caused damage to the rental property or has not fulfilled all of their obligations under the lease agreement. Specifically, landlords may be able to deduct the following expenses from a tenant’s security deposit:

  • Unpaid rent: If the tenant owes rent at the end of the lease term, the landlord can deduct this amount from the security deposit.
  • Repairs for damage caused by the tenant: The landlord can deduct the cost of repairing any damage that the tenant has caused to the rental property beyond normal wear and tear. For example, if the tenant has put a hole in the wall or damaged a kitchen appliance, the landlord may be able to deduct the cost of repairs from the security deposit.
  • Cleaning expenses: If the tenant has left the rental property in a state that requires cleaning beyond what is considered normal wear and tear, the landlord may be able to deduct the cost of cleaning from the security deposit.
  • Unpaid utility bills: If the tenant has not paid for any utilities that are the tenant’s responsibility, such as gas or electric bills, the landlord may be able to deduct these unpaid bills from the security deposit.
  • Other expenses: In some cases, landlords may be able to deduct other expenses that are related to the tenant’s breach of the lease agreement, such as legal fees or the cost of re-renting the property.

It’s important to note that landlords in New York City must provide tenants with an itemized statement of any deductions made from the security deposit, as well as any receipts or other documentation related to those deductions. If the landlord fails to do so or if the tenant disputes the deductions, the tenant may be able to take legal action to recover the full amount of the security deposit.

Is There Additional Information That Landlords Must Provide To Tenants When It Comes To Security Deposit In New York?

Yes. Landlords in New York are required to reveal the name and address of the financial institution holding the security deposit as well as the amount of the deposit if it is held in a bank. Every time a tenant rents from a landlord, the landlord is allowed to keep 1% of the deposit each year as an administrative charge. Also in New York, owners of unregulated apartments in structures with six or more units are required to give tenants interest on security deposits. According to the tenant’s preference, the interest might be deducted from the rent, paid at the end of each year, or paid at the end of the lease.

File Your Lawsuit In A New York Small Claims Court

The cost of suing your landlord is typically less than $50. (fee waivers or deferrals are sometimes available for people with low incomes). You don’t need a lawyer; in many small claims courts, they aren’t even permitted. After the first filing, small claims court proceedings are typically heard by a judge (there are no juries).

Up to the state’s maximum, you can file a lawsuit for the amount of the security deposit that your landlord improperly kept back. In the Small Claims Court of New York City, your lawsuit can only be for a maximum of $10,000. The maximum is $5,000 in other City Courts and in the small claims courts of Nassau and Suffolk Counties. The maximum is $3,000 in Town and Village Courts.

For more detail about New York’s small claims court procedures, visit the New York courts’ small claims website. On the site, you’ll find a comprehensive guide to small claims cases in New York state City, Town, and Village Courts, along with a guide to small claims and commercial small claims in New York City, Nassau County, and Suffolk County.

What You Need To Know

The relevant statute(s) can be found at N.Y. General Obligations Law sections 7-103 to 7-108 (2022) if you wish to search up New York law on security deposits directly, or if you’re writing a letter to a landlord or tenant and want to cite the appropriate law.

To access New York statutes, visit the New York State Senate’s website, or check out the Library of Congress’s legal research site. The New York attorney general’s website also offers a list of New York housing and renting resources.

Leave a Comment

This blog is ONLY for informational or educational purposes and DOES NOT substitute professional legal advise. We take no responsibility or credit for what you do with this info.