NYC Rent Security Deposit Laws

Rent security deposits in NYC and in New York State are capped at one month of rent according to the Housing Stability and Tenant Protection Act of 2019. This limitation does not apply to seasonal rentals of 120 days or less.

Within fourteen days of a tenant vacating, a landlord must provide the tenant with an itemized statement indicating the basis for the amount of the deposit retained, if any, and return any remaining portion of the deposit to the tenant.

Tenants in NYC also have the right to request an inspection before moving in to assess any existing damage, and landlords must draft a written agreement which itemizes any such damage. Additionally, all tenants have the right to request an inspection prior to moving out.

The landlord must disclose the presence of any conditions which may result in a deduction from the security deposit, and the tenant has the opportunity to repair any issues prior to vacating the property.

Tenants in NYC are also entitled to any interest earned on a security deposit in excess of 1%.

Is There a Limit on the Size of a Rent Security Deposit in NYC?

Yes. Rental security deposits in NYC are limited to a maximum of one (1) month of rent. Rental regulation changes enacted in 2019 also prohibit the prepayment of rent. This means that the maximum amount of money a New York City landlord may collect upon lease signing is one month of rent and a one month security deposit, for a total of two months.

It’s important to note that the one-month cap on the size of a security deposit does not apply to existing leases which were signed prior to July 14th, 2019.

Rent security deposits in NYC are capped at 1 month of rent. Landlords are required to return security deposits within 14 days of moving out.

A landlord who collected a security deposit in excess of one month for an existing lease is permitted to hold onto the full, original security deposit amount until the expiration of the lease.

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Does the 1 Month Security Deposit Cap Apply to Seasonal Rentals?

The one-month cap on security deposits in NY and NYC does not apply to seasonal rentals of 120 days or less. While the Housing Stability and Tenant Protection Act of 2019 (“HSTPA”) did not originally exclude seasonal rentals, new legislation was passed in 2021 which excludes seasonal rentals.

Senate Bill S6788, which excludes certain seasonal use rentals from the provisions regulating security deposits and advance rent payments, was signed into law by Governor Kathy Hochul on 9/20/21.

This bill also allows seasonal rentals to collect rent for the entire lease term upfront. This was previously outlawed by HSTPA.

A property must meet the following requirements to qualify as a seasonal use dwelling under the language of the bill:

  • The dwelling must be registered with the appropriate local government, county, or state registry as a seasonal use dwelling.

  • The dwelling may not be rented as a seasonal use property for more than 120 days during each calendar year.

Additionally, the seasonal rental lease must confirm to the following requirements:

  • (i) Expressly provide that the dwelling unit is registered as a seasonal use dwelling unit, indicating the local or county government agency with which it is registered.

  • (ii) State that the occupancy of the tenant is only for seasonal use not to exceed one hundred twenty days or a shorter period.

  • (iii) Provide primary residence address that the tenant will return to upon lease expiration.

When Do Rent Security Deposits in NYC Have to Be Returned?

Rental security deposits must be returned within 14 days of moving out. Under the Housing Stability and Tenant Protection Act of 2019, a tenant may also request an inspection of the unit prior to the expiration of the lease. The landlord must disclose to the tenant any potential damage which must be repaired in order to avoid a deduction from the security deposit.

The tenant has the opportunity to cure such damage prior to vacating the unit.

If a landlord fails to provide a tenant with an itemized statement of deductions and any remaining portion of the deposit within 14 days, “the landlord shall forfeit any right to retain any portion of the deposit.”

A new tenant may also request an inspection prior to moving in. The landlord is required to prepare a written agreement which documents all existing damage.

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Can a Landlord in NYC Collect an Extra Security Deposit for a Pet?

No. A landlord is not permitted to collect a security deposit amount in excess of one month, regardless of whether or not a tenant has pets.

According to Section 7-108(1-a)(a) of the New York General Obligations Law (NY GOL), “No deposit or advance shall exceed the amount of one month’s rent under such contract.”

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What If My NYC Landlord Doesn't Return My Security Deposit?

If your landlord fails to return your security deposit or makes undocumented and/or excessive deductions, the best course of action, as with any dispute, is to try and resolve it directly with the landlord.

If you’re unable to reach a resolution after a good faith attempt, you may file a case in small claims court and/or file a complaint with the Attorney General’s office.

Am I Entitled to Interest on My Security Deposit in NYC?

If you live in a landlord-owned building with six or more units, your landlord must place your deposit in New York bank account earning interest at the “prevailing rate.” You are entitled to annual interest collected on your security deposit in excess of 1%.

This means your landlord is allowed to keep the first 1% of interest as an administrative fee. Therefore, you are not entitled to any interest on your security deposit if the interest rate is less than 1%.

You may request to have your security deposit interest paid out annually, paid in a lump sum at the end of the lease term or applied to rent.

Keep in mind that there is no requirement for landlords of buildings with fewer than six units to place your security deposit in an interest earning bank account. Therefore, you are not automatically entitled to earn interest on a security deposit if you happen to be renting a condo or co-op unit from an individual.

However, if your landlord decides to place your security deposit in an interest earning account, you are entitled to any annual interest earned above 1%.

Security deposit interest laws in NYC are reflected in New York General Obligations (GOB) Law, CHAPTER 24-A, ARTICLE 7, TITLE 1:

§ 7-103. Money deposited or advanced for use or rental of real property; waiver void; administration expenses. 1. Whenever money shall be deposited or advanced on a contract or license agreement for the use or rental of real property as security for performance of the contract or agreement or to be applied to payments upon such contract or agreement when due, such money, with interest accruing thereon, if any, until repaid or so applied, shall continue to be the money of the person making such deposit or advance and shall be held in trust by the person with whom such deposit or advance shall be made and shall not be mingled with the personal moneys or become an asset of the person receiving the same, but may be disposed of as provided in section 7-105 of this chapter.

2. Whenever the person receiving money so deposited or advanced shall deposit such money in a banking organization, such person shall thereupon notify in writing each of the persons making such security deposit or advance, giving the name and address of the banking organization in which the deposit of security money is made, and the amount of such deposit. Deposits in a banking organization pursuant to the provisions of this subdivision shall be made in a banking organization having a place of business within the state. If the person depositing such security money in a banking organization shall deposit same in an interest bearing account, he shall be entitled to receive, as administration expenses, a sum equivalent to one per cent per annum upon the security money so deposited, which shall be in lieu of all other administrative and custodial expenses. The balance of the interest paid by the banking organization shall be the money of the person making the deposit or advance and shall either be held in trust by the person with whom such deposit or advance shall be made, until repaid or applied for the use or rental of the leased premises, or annually paid to the person making the deposit of security money.

2-a. Whenever the money so deposited or advanced is for the rental of property containing six or more family dwelling units, the person receiving such money shall, subject to the provisions of this section, deposit it in an interest bearing account in a banking organization within the state which account shall earn interest at a rate which shall be the prevailing rate earned by other such deposits made with banking organizations in such area.

2-b. In the event that a lease terminates other than at the time that a banking organization in such area regularly pays interest, the person depositing such security money shall pay over to his tenant such interest as he is able to collect at the date of such lease termination.

3. Any provision of such a contract or agreement whereby a person who so deposits or advances money waives any provision of this section is absolutely void.

4. The term “real property” as used in this section is co-extensive in meaning with lands, tenements and hereditaments.

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Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided.

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