New York

Security Deposit Amount

In New York, the maximum security deposit a landlord can charge is one month’s rent. This applies to all residential rental agreements, including leases for rent-stabilized and market-rate apartments.

Options for Holding

New York landlords have two options for lawfully holding security deposits:

• Separate Account Requirement: Landlords must place the security deposit in an interest-bearing account in a New York State bank. The deposit must be kept separate from the landlord’s personal funds.
• Fiduciary Responsibility: Landlords act as fiduciaries of the security deposit, meaning they have a legal obligation to manage the funds responsibly and in the best interest of the tenant.

Notification Requirements

Within 30 days of receiving the security deposit, the landlord must provide the tenant with written notice that includes the name and address of the bank where the deposit is held and the amount of interest that will accrue.

Payment of Interest Earned

The interest earned on the security deposit belongs to the tenant, minus a 1% administrative fee that the landlord may retain.

Tenants have the option to choose how the interest will be handled. They may (1) apply it as rent credit, (2) receive the interest payment annually, or (3) add it to the security deposit.

Timeline for Returning

Landlords must return the security deposit, along with an itemized statement of any deductions, within 14 days after the tenant vacates the property.

Claims Process

The landlord must provide the tenant with an itemized statement of any deductions made from the security deposit. This statement must list the reasons for each deduction (e.g., unpaid rent, damages beyond normal wear and tear) and the amount deducted for each.

The statement must be in writing, and it is advisable to send it via a method that provides proof of delivery, such as certified mail or email.

Landlords are expected to act in good faith when making claims against the security deposit. Wrongful withholding of a deposit or failure to provide an itemized statement can be seen as acting in bad faith, leading to penalties.

If a tenant believes their security deposit was wrongfully withheld or not returned in full, they can file a claim in small claims court for up to $10,000.

Landlords in New York may use the security deposit for:

• ‍Unpaid Rent: Covering any unpaid rent at the end of the lease.‍
• Repairing Damage: Repairing damages caused by the tenant beyond normal wear and tear.‍
• Cleaning Costs: Cleaning the unit if it is not returned in a clean condition.‍
• Lease Violations: Addressing other breaches of the lease agreement that result in financial loss to the landlord.

Failure to Return: Failure to return the security deposit within 14 days may result in the landlord being liable for the full deposit amount plus interest and up to 2x the deposit amount in additional damages.

Wrongful Withholding: If a landlord wrongfully withholds any part of the security deposit, they may be required to pay the tenant the full amount of the deposit, plus any accrued interest, and potentially face additional penalties.

Failure to Place in a Separate Account: If a landlord fails to place the security deposit in a separate interest-bearing account, the tenant can recover the deposit immediately and seek legal action for any damages incurred.

Change of Ownership: If the property is sold or the landlord changes, the new owner or landlord must notify the tenant in writing that they have assumed responsibility for the security deposit.