Yes, at the initial renting of the apartment to the tenant, the owner may collect a security deposit. The amount of a security deposit can be no more than one month’s rent. The security deposit must be kept by the owner in an interest bearing account in a NYS bank. For further details, see HCR Fact Sheet #9: Renting an Apartment – Security Deposits and Other Charges.
The New York State Attorney General investigates rent security deposit complaints. They help resolve complaints that a landlord has failed to place security deposits in trust accounts, has failed to pay interest on deposits if required by law, has charged more than one month’s rent for a security deposit or advance fee, or has failed to return the security deposit when the tenant moved out.
If, however, your landlord refuses to return your security deposit because, for example, your landlord says that you failed to pay rent or damaged the apartment, you must generally go to Small Claims Court to resolve the dispute. You may also be entitled to punitive damages if you paid more than one month’s rent for a security deposit or advance fee. However, the Attorney General cannot collect punitive damages. Tenants who seek punitive damages must make this claim in court.
Before submitting this complaint to the AG’s office, you must attempt to resolve the matter with your landlord.
When a lease is renewed at a higher rental amount, or the rent is increased during the term of the lease, the owner can collect additional money from the tenant to bring the security deposit up to the new monthly rent. Even though a tenant may be exempt from paying a lease increase because of his or her Senior Citizen Rent Increase Exemption (SCRIE) or Disability Rent Increase Exemption (DRIE), the tenant must still pay the increased security.
The security deposit must be kept by the owner in an interest-bearing account in a New York State bank. The owner must notify the tenant of the name and address of the bank and pay the tenant the full annual interest, less 1% of the security deposit per year for the owner’s administrative costs. The tenant can choose whether the interest is to be subtracted from the rent, held in trust until the end of the tenancy, or paid in a lump sum at the end of each year.
However, be aware that if funds are kept in a checking account with an interest rate of 1% or less, tenants may not be eligible to receive any interest at all.
A security deposit should not be used as a final month’s rent. At the end of the lease, if the tenant honored the terms and conditions of the lease and left the apartment in the same condition as it was when initially rented, except for normal wear, the owner must return the full security deposit. If damage was done, the owner may apply part or all of the security deposit to the cost of repair.
If the tenant disagrees with the owner over the return of the security deposit or payment of interest, the tenant may begin a proceeding in Small Claims Court or contact the Consumer Frauds and Protection Bureau of the NYS Attorney General.
According to the Housing Stability And Tenant Protections Act of 2019, for tenants in non-rent regulated apartments:
Within fourteen days after the tenant has vacated the premises, the landlord shall provide the tenant with an itemized statement indicating the basis for the amount of the deposit retained, if any, and shall return any remaining portion of the deposit to the tenant. If a landlord fails to provide the tenant with the statement and deposit within fourteen days, the landlord shall forfeit any right to retain any portion of the deposit.
Yes, the new owner of the building the landlord is responsible for security deposits. When a building is sold or title is transferred in foreclosure, the landlord must transfer all security deposits to the new owner within five days, or return the security deposits to the tenants. Landlords must notify the tenants, by registered or certified mail, of the name and address of the new owner. Purchasers of rent stabilized buildings are directly responsible to tenants for the return of security deposits and interest. This responsibility exists regardless of whether the new owner received the security deposits from the former landlord.
All leases will remain valid even if the building is transferred through mortgage foreclosure.
For more information, see the security deposit section of the NYS Attorney General’s website. If you live in a rent regulated apartment, you may also be able to file a complaint with NYS Homes and Community Renewal (HCR), the state agency which administers the rent laws.