What is a security deposit?
A Security Deposit is money a tenant deposits with the landlord which protects the landlord should the tenant stop paying rent, skips out early on the lease, or damages the apartment.
What is the law in New York regarding security deposits?
Is there a limit to how much of a Security Deposit a landlord can collect?
In New York City, there is no law for an unregulated apartment limiting what a landlord may charge for a security deposit.
However, if the apartment is rent stabilized, a landlord may ONLY collect a security deposit equal to one month’s rent.
Can the landlord charge a Nonrefundable Deposit?
No. In New York, a landlord cannot charge a nonrefundable security deposit.
Who does the Security Deposit belong to?
It is important to note that the security deposit is considered the property of the tenant. The landlord must treat the security deposit as trust funds belonging to their tenant until the end of the lease or when the tenant vacates the apartment.
The Security Deposit must not be commingled with any personal money of the landlord and the landlord cannot use the Security Deposit during the duration of the lease.
The tenant cannot have access to the security deposit until they have vacated the premises and surrendered possession.
Where is the landlord required to keep the Security Deposit?
The security deposit must be stored at a banking institution that has a location within the State of New York.
The landlord must provide the tenant written notice which includes: 1) The Name of the Banking Institution, 2) The Address of the Banking Institution, and 3) the Total Amount of Money Deposited, regarding the security deposit.
Does a landlord have to keep the security deposit in an interest-bearing account?
If the building has six or more units the landlord MUST deposit the Security Deposit in an Interest Bearing Account.
What happens to the Interest of the Security Deposit?
The owner may keep one percent of the deposit amount each year as an administrative fee.
Tenants must be given the option of having this interest paid to them annually, applied to rent, or paid at the end of the lease term.
Can a security deposit be increased?
If a lease is renewed at a greater amount or the rent is increased after the term of the lease, the owner is permitted to collect additional money from the tenant in order to bring the security deposit up to the new monthly rent.
Can the landlord or tenant apply the security deposit to unpaid rent?
No. The landlord cannot apply the security deposit to unpaid rent during the duration of the lease, without the tenant’s consent. (Doing so may forfeit the landlord’s right to collect an additional security deposit.) The landlord may apply the security deposit to unpaid rent after the tenant vacates the premises.
Similarly, the tenant cannot use the security deposit in place of rent, without the landlord’s consent.
What happens to the tenant’s security deposit if the landlord sales the building?
If the building is sold, the landlord must transfer all security deposits to the new owner within five (5) days or return the security deposits to the tenants. The landlord must notify the tenants, by registered or certified mail, of the name and address of the new owner.
When can a landlord keep a security deposit?
In New York, the landlord may keep all or a portion of the tenant’s security deposit for any damages to the apartment beyond normal wear and tear, you left your lease early, or there is unpaid rent.
*Practice Tip: The landlord should take pictures of any damages to the apartment after the tenant vacates and keep receipts and/or invoices representing the repairs.
Is a walk thru inspection required when the tenant vacates?
No, an inspection is not required for the return of a security deposit.
However, when a tenant vacates the apartment, the tenant should leave the premises in broom clean condition, removing all personal belongings and trash from the apartment, and making any minor repairs needed. When tenant vacates the apartment the tenant should do a walk thru and when the keys are returned the tenant should receive a dated receipt.
*PRACTICE TIP: A tenant should take pictures of the apartment on the date they moved in and the date they moved out, holding that days newspaper.
How should a tenant request a security deposit back form the landlord?
When the tenant vacates, the tenant should request the return of the security deposit in writing via certified mail and provide the landlord with the tenant’s new address.
How long does a landlord have to return a security deposit after the tenant vacates?
A landlord must return the security deposit, less any lawful deductions, to the tenant at the end of the lease or within a reasonable time thereafter, whether or not the tenant asks for the return. Usually, a reasonable period of time is 30-60 days; however, the definition of “reasonable” is for the court to decide.
What if the landlord does not return the security deposit?
You can file a claim in Small Claims Court. In a Small Claims case for the return of a security deposit: the tenant must prove: 1) the tenant paid a security deposit to the landlord, 2) the tenant caused no damage to the apartment beyond ordinary wear and tear, 3) the tenant made a demand for the return of the security deposit, 4) the landlord refused the return of the security deposit. Once the tenant has established that the security deposit is the tenant’s property, the burden shifts to the landlord to prove: 1) the landlord must show that the tenant caused damage to the property beyond ordinary wear and tear and 2) the landlord must prove what cost was incurred (or is estimated to incur) in order to remediate the extraordinary damage caused by the tenant.
You can also contact the NYS Attorney General's Office.The Attorney General’s Office accepts tenant complaints involving security deposits. After a tenant files a complaint, the Attorney General will contact the landlord, providing him/her with the opportunity to reply. The Attorney General's approach is to mediate a resolution by informing the landlord of the obligations of the law and the Attorney General's authority to enforce the law.