New York State Security Deposit Law
Understanding the New York Security Deposit Law is crucial for both landlords and tenants in the state. This law outlines specific rules and regulations regarding the collection, holding, and return of security deposits in rental situations.
Maximum Security Deposit Limit
The Housing Stability and Tenant Protection Act stipulates that the maximum security deposit in New York, including for units under rent control or rent stabilization, is limited to one month’s rent.
Returning the Security Deposit
In New York, landlords have 14 days after the tenant has vacated the property to return the security deposit. During this period, they must provide the tenant with an itemized statement detailing any deductions from the deposit for repairs or unpaid rent. If the landlord fails to return the deposit or provide this itemized statement within the 14-day window, they may forfeit their right to keep any of the deposit and potentially be liable for additional damages.
Pet Deposits and Additional Fees
While landlords in New York can charge a pet deposit, the total security deposit, including the pet deposit, cannot exceed one month’s rent. This restriction applies unless the residence is exempt. However, landlords are allowed to add a monthly pet premium.
Advance Rent Collection
Landlords can collect the first month’s rent in advance plus one additional month’s rent as a security deposit. Importantly, they cannot also collect the last month’s rent in advance, keeping the total collectible amount to two months’ rent.
Pre-Occupancy Inspection Rights
Tenants have the right to inspect the property before occupancy. If they choose to do so, a written statement documenting the condition of the unit should be signed by both the landlord and tenant.
Banking and Notification Requirements for Deposits
Landlords must keep security deposits separate from other funds. For properties with six or more units, property managers must place deposits in an interest-bearing account in a New York bank and notify tenants of the bank details in writing.
Interest on Security Deposits
Tenants are entitled to the interest generated by their security deposit in buildings with six or more apartments or if the deposit is in an interest-bearing account. The landlord can deduct 1% of the interest annually as an administrative fee.
Security deposits are not considered taxable income when collected.
Transfer of Deposits Upon Property Sale
When a property is sold, the original landlord must transfer the security deposits to the new owner within five days or return them to the tenants. The new owner is responsible for the return of the deposits and any accrued interest.
Landlord’s Right to Withhold
Landlords can withhold part of the security deposit to cover any unpaid rent or tenant-caused damage to the property. Tenants should keep proof of rent payment and can request repair receipts if damage is claimed.
Implications for Tenants and Landlords
Understanding these laws helps ensure tenants’ rights are protected, and they are not overcharged. They should know their right to an initial inspection and the conditions under which they can receive their full deposit back.
For landlords, compliance with these laws is crucial to avoid legal issues. It’s essential to be transparent about where the security deposit is held, ensure it is in a separate account for more significant buildings, and be aware of the limitations on the total amount that can be collected.
In summary, the New York Security Deposit Law provides a framework to protect tenant and landlord interests, ensuring a fair and transparent process for handling security deposits. Compliance with these regulations is critical to maintaining a healthy landlord-tenant relationship.
Qira aims to keep this information as up-to-date as possible. The content provided here is informational and should be different from legal counsel. Please refer to the relevant government sources to check for any changes or updates to the law.