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Contents
This article provides general information and is not legal advice. For accuracy and specific guidance on landlord-tenant laws, consult an attorney before making any decisions or taking action.
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Collecting security deposits is one of the crucial rights landlords have during a landlord-tenant relationship. These payments safeguard landlords against the risk of missed or late rent payments and damage to their property above ordinary wear and tear.
However, New York state laws regulate how much a landlord can charge for a security deposit, as well as deadlines for returning deposits upon the termination of the rental agreement. Landlords must understand New York security deposit laws to ensure compliance and a smooth rental experience.
This article will cover everything landlords need to know about security deposit in New York, from the maximum allowable amounts to security deposit returns. Additionally, we will address common questions about New York security deposit law at the end of this article.
According to the Housing Stability and Tenant Protection Act of 2019, landlords in New York can only request a security deposit equal to one month's rent. It’s important to note that this maximum security deposit applies exclusively to residential properties that are not rent-stabilized.
Security deposits are capped at one month's rent, with the following exceptions:
Under New York law, pet deposits are not allowed as the maximum security deposit a landlord can charge is 1 month’s rent - an additional pet deposit would go over that limit. However, landlords may request a one-time non-refundable pet fee to cover potential damages caused by pets.
Landlords must ensure equal access to rental homes for individuals with disabilities who rely on service animals. This means that landlords are prohibited from discriminating against tenants with service animals and cannot charge them an additional fee. However, tenants remain responsible for any damages caused by their service animals.
According to New York security deposit law, landlords are permitted to collect a security deposit at the beginning of a tenancy. You have the option to manage these fees manually or automate the process using an electronic transfer system like Landlord Studio.
Landlord Studio offers an efficient solution for managing security deposits, enhancing compliance and organization. This property management software streamlines online deposit collection, organizes transaction records, and securely stores important documents such as receipts and inspection reports.
Additionally, it is advisable for landlords to conduct move-in inspections before collecting the security deposit. This practice allows you to assess and document the property's condition at the start of the tenancy, helping to minimize potential disputes over damages in the future.
As outlined in the New York General Obligations Law, Section 7-108(1-a)(b), landlords are permitted to deduct from a tenant's security deposit for the following reasons:
Landlords only have 14 days after the lease's end date and the tenant vacates the property for a security deposit return, per New York security deposit laws. If any deductions for repairs need to be made from the deposit, the landlord must provide the tenant with a detailed report outlining the issues and the associated costs for repairs.
Tenants then have the option to address these issues themselves, or the repair costs will be deducted from their security deposit. If the landlord fails to provide this report, they forfeit any claim over the security deposit and must return the full amount to the tenant.
According to HCR Fact Sheet #9: Renting an Apartment – Security Deposits and Other Charges, landlords in New York are required to hold security deposits in an interest-bearing account at a bank located in New York State. The owner must inform the tenant of the bank's name and address, and they are obligated to pay the tenant the full annual interest earned on the deposit, minus 1% for administrative costs.
Tenants have the option to decide how they wish to receive this interest: it can be deducted from their rent, held in trust until the end of the tenancy, or paid as a lump sum at the end of each year.
It's important to note that if the security deposit is kept in a checking account with an interest rate of 1% or less, tenants may not receive any interest at all.
Security deposits in New York are not classified as taxable income until the landlord is no longer obligated to return them, as the deposit may still be subject to a refund. However, if a lease violation leads to the forfeiture of the deposit or its use to cover overdue rent, the amount retained must be reported as income in the year it was forfeited.
Using software like Landlord Studio can streamline this process, making it easier for landlords to manage security deposits and ensure compliance with tax regulations.
Create your free Landlord Studio account to collect rent online, manage deposits, and automate rent reminders and late fees.
Landlords can maximize the benefits of security deposit regulations by ensuring compliance with New York's security deposit laws.
To recap, landlords may only request a security deposit equal to one month's rent. It is essential for landlords to manage these deposits appropriately, including making timely deductions for unpaid rent or damages and returning deposits within the required timeframes.
Adhering to these laws not only helps prevent disputes but also fosters a positive rental relationship.
Yes, landlords in New York can collect a security deposit, which must not exceed one month's rent. This deposit must be held in an interest-bearing account at a bank located in New York State.
If a tenant files a complaint with the New York State Attorney General regarding their security deposit, you should respond promptly and provide any necessary documentation. Common complaints include failure to return the deposit, not placing it in a trust account, or not paying required interest.
Yes, if you increase the rent upon lease renewal, you can also require an additional amount to bring the security deposit up to the new rental amount. Ensure that this is clearly communicated to the tenant.
Yes, you must keep security deposits in an interest-bearing account and pay tenants the full annual interest earned, minus 1% for administrative costs. You are required to inform tenants of the bank's name and address.
At the end of the lease, you must return the security deposit within 14 days if the tenant has fulfilled all lease obligations and left the apartment in good condition. If there are damages beyond normal wear and tear, you may deduct repair costs but must provide an itemized statement of any deductions.
When your building is sold or foreclosed, you must transfer all security deposits to the new owner within five days or return them directly to the tenants. You must also notify tenants by registered or certified mail of the new owner's name and address.
If you do not return the security deposit or provide an itemized statement within 14 days, you forfeit your right to retain any portion of it. This could lead to legal repercussions and potential claims in Small Claims Court by the tenant.
For more detailed information on your obligations as a landlord regarding security deposits, refer to HCR Fact Sheet #9: Renting an Apartment – Security Deposits and Other Charges.
