New York security deposit rules: limit, return deadline and deductions

The one-month limit

New York limits what a landlord can collect up front. The statute says no deposit or advance shall exceed the amount of one month’s rent. Because it covers a “deposit or advance”, the limit isn’t just about money labeled as a security deposit.

Example: on a unit renting for $1,800 a month, the most the statute allows as a deposit or advance is $1,800. The statute lists two exceptions, each with its own conditions.

Maximum

One month’s rent for any deposit or advance. N.Y. Gen. Oblig. Law § 7-108(1-a)(a)

Seasonal use units

Outside the limit when the unit is registered with a local or county seasonal use registry and the lease meets the listed conditions. The lease states the registration, a seasonal stay of no more than 120 days and the tenant’s primary residence address. The unit can’t be rented as seasonal for more than 120 days in a calendar year. N.Y. Gen. Oblig. Law § 7-108(4), (5)

Owner-occupied co-op apartments

Outside the limit when the tenant is the owner, purchaser or shareholder of the cooperative and the other listed conditions are met. N.Y. Gen. Oblig. Law § 7-108(6)

No waiver

An agreement by a tenant that waives or changes these rights is void. N.Y. Gen. Oblig. Law § 7-108(3)

Two inspections: before move-in and before move-out

The statute builds a paper trail around the deposit. It starts with an inspection offer before the tenant moves in and ends with a second inspection, at the tenant’s request, shortly before move-out.

Example: a tenancy ends June 30 and the tenant asks for the inspection. It takes place no earlier than June 16 and no later than June 23, and the landlord gives written notice of the date and time at least 48 hours ahead.

Move-in inspection

After the lease is signed and before the tenant begins occupancy, the landlord offers the tenant the chance to inspect the unit together. If the tenant asks for it, both sides sign a written agreement before occupancy that notes any existing defects or damage. Nothing noted in that agreement can be deducted from the deposit later. N.Y. Gen. Oblig. Law § 7-108(1-a)(c)

Notice of the move-out inspection right

Within a reasonable time after either side gives notice that the tenancy is ending, the landlord tells the tenant in writing of the right to ask for an inspection and to be present at it. This doesn’t apply when the tenant ends the tenancy with less than two weeks’ notice. N.Y. Gen. Oblig. Law § 7-108(1-a)(d)

When it happens

No earlier than two weeks and no later than one week before the end of the tenancy, with at least 48 hours’ written notice of the date and time. N.Y. Gen. Oblig. Law § 7-108(1-a)(d)

After the inspection

The landlord gives the tenant an itemized statement of the repairs or cleaning proposed as the basis for deductions. The tenant has the chance to cure them before the tenancy ends. N.Y. Gen. Oblig. Law § 7-108(1-a)(d)

The 14-day deadline and what can be deducted

Within 14 days after the tenant has vacated, the landlord provides an itemized statement showing the basis for any amount kept and returns the remaining portion of the deposit. The statement and the money share the same 14 days.

Example: the deposit is $1,800. The tenant leaves owing $300 in rent, and a broken interior door costs $150 to replace. The statement lists both items, $450 in all, and $1,350 goes back to the tenant, all within 14 days.

The statute doesn’t name a delivery method, and it doesn’t require receipts with the statement. If the amount kept is disputed in court, the landlord has the burden of proving it was reasonable.

Deadline

Within 14 days after the tenant has vacated the premises: itemized statement plus any remaining deposit. N.Y. Gen. Oblig. Law § 7-108(1-a)(e)

Allowed deductions

Reasonable and itemized costs due to non-payment of rent, damage caused by the tenant beyond normal wear and tear, unpaid utility charges payable directly to the landlord under the lease, and moving and storage of the tenant’s belongings. N.Y. Gen. Oblig. Law § 7-108(1-a)(b)

Not allowed

Costs for ordinary wear and tear of occupancy, or for damage caused by a prior tenant. N.Y. Gen. Oblig. Law § 7-108(1-a)(b)

Burden of proof

In a dispute over the amount kept, the landlord bears the burden of proof on whether it was reasonable. N.Y. Gen. Oblig. Law § 7-108(1-a)(f)

Where the deposit is kept, and interest

Under § 7-103 the deposit stays the tenant’s money. The landlord holds it in trust and can’t mix it with personal money or treat it as an asset. A lease clause waiving this section is void.

Interest depends on the size of the property. With six or more family dwelling units, the deposit goes in an interest-bearing account at a bank in New York that earns the prevailing rate for such deposits in the area. Below six units the statute doesn’t require an interest-bearing account. If a landlord of any size uses one, the same split applies.

Example: a $2,000 deposit sits in an account paying 3% a year and earns $60. The landlord may keep 1% a year of the deposit, $20, as administration expenses. The other $40 belongs to the tenant.

Held in trust

The deposit, with any interest, stays the tenant’s money and is not mingled with the landlord’s personal money. N.Y. Gen. Oblig. Law § 7-103(1)

Bank notice

A landlord who puts the deposit in a bank notifies the tenant in writing of the bank’s name and address and the amount of the deposit. The bank has a place of business in New York. N.Y. Gen. Oblig. Law § 7-103(2)

Six or more units

Deposit kept in an interest-bearing account at a bank in the state, earning the prevailing rate for such deposits in the area. N.Y. Gen. Oblig. Law § 7-103(2-a)

Administration fee

On an interest-bearing account the landlord may take 1% a year of the deposit, in place of all other administrative and custodial expenses. N.Y. Gen. Oblig. Law § 7-103(2)

The tenant’s interest

The balance of the interest is the tenant’s. It is held in trust until repaid or applied to rent, or paid to the tenant each year. N.Y. Gen. Oblig. Law § 7-103(2)

Penalties, and what happens when the building is sold

Missing the 14 days has a built-in cost: the right to keep any portion of the deposit is forfeited. On top of that, anyone who violates subdivision 1-a is liable for actual damages, and a willful violation can add punitive damages of up to twice the deposit or advance. On an $1,800 deposit that is up to $3,600 in punitive damages.

When a property is conveyed, § 7-105 has the seller turn the deposits over to the buyer at delivery of the deed or within five days after, and notify each tenant by registered or certified mail with the buyer’s name and address. The seller is then relieved of liability and the buyer becomes responsible for returning the deposit. The section doesn’t apply where the agreement between landlord and tenant is inconsistent with it.

Missed deadline

The landlord forfeits any right to retain any portion of the deposit. N.Y. Gen. Oblig. Law § 7-108(1-a)(e)

Damages

Actual damages for a violation. Punitive damages of up to twice the amount of the deposit or advance for a willful violation. N.Y. Gen. Oblig. Law § 7-108(1-a)(g)

Sale of the property

Deposits go to the buyer at delivery of the deed or within five days after, with notice to the tenant by registered or certified mail. Failure to comply with § 7-105 is a misdemeanor under § 7-105(3). N.Y. Gen. Oblig. Law § 7-105(1)

Buyer’s liability

If a deposit isn’t turned over, the buyer is also liable to the tenant for a deposit, plus accrued interest, that the buyer has actual knowledge of. Where there is no record of a deposit, the buyer notifies the tenant in writing within 30 days after closing, and the tenant has 30 days after that notice to show a cancelled check, a receipt or a signed lease. N.Y. Gen. Oblig. Law § 7-108(2)(a)

What this page doesn’t cover

Section 7-108 applies to all dwelling units in residential premises unless § 7-107, the section for rent-stabilized units, specifically refers to them. Subdivision 1-a, with the one-month limit and the 14-day deadline, also leaves out rent-controlled units and several kinds of licensed senior and care housing.

This page doesn’t cover rent-stabilized or rent-controlled units, manufactured home lots, subsidized housing program rules or commercial leases. Cities and counties can add their own rules, so check locally.

Left out of subdivision 1-a

Units under the city rent and rehabilitation law or the emergency housing rent control law, licensed continuing care retirement communities, assisted living providers, adult care facilities, and certain senior residential and not-for-profit independent retirement communities. N.Y. Gen. Oblig. Law § 7-108(1-a)

Rent-stabilized units

Dwelling units specifically referred to in § 7-107 fall outside § 7-108. N.Y. Gen. Oblig. Law § 7-108(1)