Security Deposits and Tenant Rights in New York


When searching for a rental in New York, you will likely need to pay a security deposit. A security deposit is an upfront payment to the landlord to provide security against potential damages during the lease term. While security deposits are standard practice, tenants and landlords must understand the regulations surrounding them to protect their rights. In this blog post, we’ll explore some of the key aspects of security deposits.

Limitations on Security Deposit Amounts

To protect tenants, New York has laws and regulations to limit the maximum security deposit a landlord can charge. These restrictions promote a fair and accessible housing market.

Residential landlords can no longer demand a security deposit exceeding one month’s rent.. This means landlords cannot demand more than one month’s rent as a security deposit. However, this limit isn’t retroactive; tenants with existing leases signed before July 14th, 2019, may have deposits greater than one month’s rent. 

By limiting the security deposit, tenants are protected from landlords who might demand exorbitant sums upfront, making it difficult for many to secure housing. As a tenant, it’s essential to be aware of these rules when negotiating a lease. Landlords, too, must familiarize themselves with these laws to avoid potential legal consequences.

Interest on Security Deposits

Landlords with properties containing six or more units must place the funds in an interest-bearing account. Tenants can choose to receive interest payments yearly, at the end of the tenancy, or apply it to rent. Landlords can deduct a 1% administrative fee from the interest, but not from the deposit. The specific interest rate is determined by the New York State Division of Housing and Community Renewal (DHCR) and can change from year to year.

The owner is required to maintain the security deposit in an interest-bearing account at a New York State bank. They must inform the tenant of the bank’s name and address and provide the tenant with the entire annual interest, minus 1% of the security deposit per year, to cover administrative expenses. The tenant has the right to decide whether the interest should be deducted from the rent, held in trust until the tenancy ends, or released as a lump sum at the end of each year.

Rules for Returning Security Deposits

It is critical to understand the rules for returning a security deposit at the end of a lease. These rules play a significant role in safeguarding tenants’ rights while protecting landlords.

When returning the security deposit, landlords are required to provide an itemized inventory of deductions, if any, along with the remaining balance. Common deductions may include unpaid rent, cleaning fees, and repairs beyond “normal wear and tear.” By providing an itemized list, tenants have clarity on why deductions were made and can dispute any unreasonable charges.

Move-Out Inspection 

In New York, landlords are typically required to return the security deposit within a specific timeframe, usually 14 days. This time allows landlords to assess the condition of the unit after the tenant moves out and determine if deductions need to be made from the deposit.

When tenants intend to terminate their lease, they can request a move-out inspection. Landlords must cooperate and inform tenants of any necessary repairs or cleaning to avoid withholding any portion of the security deposit.

Security Deposit Deductions and Disputes

While the rules for returning security deposits are designed to protect tenants, disputes can still arise over deductions from the deposit. Here are some common scenarios and tips for navigating them:

  • Unpaid Rent: Using the security deposit as the last month’s rent is not allowed and could result in legal action by the landlord. Such actions may affect a tenant’s credit report and future renting prospects.
  • Cleaning Fees: Landlords often charge cleaning fees if the rental unit is not returned in a clean and habitable condition. To avoid disputes over cleaning deductions, tenants should thoroughly clean the unit before moving out and document their efforts with photographs and a cleaning checklist.
  • Repairs Beyond Normal Wear and Tear: Landlords can deduct from the security deposit for damages that go beyond normal wear and tear. To protect yourself, document any pre-existing damage when you move in and promptly report any maintenance issues during your tenancy. This can help establish that you are not responsible for the damages in question.
  • Itemized Deductions: As mentioned earlier, landlords in New York are required to provide an itemized list of deductions along with the remaining balance when returning the security deposit. If you receive an itemized list that you believe contains unreasonable or inaccurate deductions, you can dispute them. Consult with an attorney at The Law Offices of Justin C. Brasch to understand your options and pursue a fair resolution.

Return Deadline

Landlords must return the security deposit, along with an itemized list of deductions, within 14 days of the tenant vacating the apartment. Failure to do so forfeits their right to retain any portion of the deposit.

Transfer of Deposit

If a landlord sells the property or assigns a lease to a new tenant, they must transfer the security deposit to the new owner or tenant and notify the previous tenant.

What should I do If my landlord doesn’t return my security deposit?

If your landlord fails to return your security deposit or makes excessive deductions, it’s advisable to first attempt to resolve the issue through direct communication with the landlord. If your efforts to reach a resolution are unsuccessful, you have the option to initiate legal action.

In the fast-paced environment of New York’s rental market, knowing your rights and having access to experienced legal professionals can make all the difference when it comes to security deposit issues. Do not hesitate to contact The Law Offices of Justin C. Brasch to secure your rights.  

Top Author

Justin Brasch
Justin C. Brasch is the founding partner of the Law Offices of Justin C. Brasch and has practiced Landlord/Tenant and Leasing law for over 20 years. His areas of practice include Business & Commercial Law, Contracts, Criminal Law, Landlord-Tenant, Leasing, New York City Building and Fire Code Violations, and Real Estate Law.Mr. Brasch has substantial experience and expertise litigating landlord-tenant and complex commercial and residential real estate disputes. Before establishing his firm in 1996, Justin Brasch was a litigation …

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