New York security deposit law

A security deposit or advance may not be more than one month's rent. The limit covers any money deposited or paid in advance, so last month's rent collected at signing counts toward it. The exceptions are a registered seasonal use unit and an owner-occupied cooperative apartment; the section also does not reach units under the city rent and rehabilitation law or emergency rent control, or licensed care and senior retirement communities.

N.Y. Gen. Oblig. Law § 7-108(1-a)(a)

• Rent stabilized units and units under the Emergency Tenant Protection Act have the same one-month limit and the same return and inspection rules under their own section. N.Y. Gen. Oblig. Law § 7-107
• A seasonal use unit qualifies only if the lease states its registration with the local registry, limits occupancy to 120 days or less and gives the tenant's primary residence address, and the unit is not rented seasonally for more than 120 days a year. N.Y. Gen. Oblig. Law § 7-108(4) N.Y. Gen. Oblig. Law § 7-108(5)
• Any lease term waiving these deposit rights is void. N.Y. Gen. Oblig. Law § 7-108(3)

Within 14 days after the tenant vacates, give the tenant an itemized statement showing the basis for any amount you keep, and return the rest. If you miss the 14 days, you lose the right to keep any part of the deposit. You may keep only reasonable, itemized costs for unpaid rent, damage by the tenant beyond normal wear and tear, unpaid utility charges payable to you under the lease, and moving and storing the tenant's belongings.

N.Y. Gen. Oblig. Law § 7-108(1-a)(b) N.Y. Gen. Oblig. Law § 7-108(1-a)(e)

• You may not keep anything for ordinary wear and tear or for damage caused by a prior tenant. N.Y. Gen. Oblig. Law § 7-108(1-a)(b)
• In a dispute over the deposit, you must prove that the amount kept was reasonable. N.Y. Gen. Oblig. Law § 7-108(1-a)(f)
• A violation makes you liable for actual damages; a willful violation adds punitive damages of up to twice the deposit. N.Y. Gen. Oblig. Law § 7-108(1-a)(g)
• When you sell or assign the property, turn the deposit over to the new owner within five days and tell the tenant by registered or certified mail the new holder's name and address. Until you do, you stay liable, and failing to comply is a misdemeanor. N.Y. Gen. Oblig. Law § 7-105
• A buyer who knew of a deposit, for example because the lease in effect at closing acknowledges it, is also liable for returning it. N.Y. Gen. Oblig. Law § 7-108(2)
• You may not withhold any part of the deposit because a tenant ended the lease under the domestic violence termination right. N.Y. Real Prop. Law § 227-c

A deposit stays the tenant's money. Hold it in trust and never mix it with your own funds. If you put it in a bank, the bank must have a place of business in New York, and you must tell each tenant in writing the bank's name and address and the amount deposited. For a property with six or more family dwelling units, the deposit must go into an interest-bearing account at a New York bank earning the prevailing local rate. In any building, interest the deposit earns belongs to the tenant, less 1 percent a year you may keep as an administration fee from an interest-bearing account.

N.Y. Gen. Oblig. Law § 7-103

• From an interest-bearing account you may keep an amount equal to 1 percent a year of the deposit as administration expenses, in place of all other custodial charges. The rest of the interest belongs to the tenant, held in trust or paid to the tenant each year. N.Y. Gen. Oblig. Law § 7-103(2)
• If the lease ends between the bank's interest dates, pay the tenant whatever interest you can collect at that point. N.Y. Gen. Oblig. Law § 7-103(2-b)
• A lease term waiving any of these rules is void. N.Y. Gen. Oblig. Law § 7-103(3)

After the lease is signed and before the tenant moves in, you must offer the tenant a joint inspection. If the tenant asks for it, you both sign a written agreement before move-in noting any existing defects or damage, and you cannot deduct from the deposit for anything it lists.

N.Y. Gen. Oblig. Law § 7-108(1-a)(c)

• The move-in agreement can be used as evidence of the starting condition only in a dispute over the deposit. N.Y. Gen. Oblig. Law § 7-108(1-a)(c)
• Within a reasonable time after either side gives notice to end the tenancy, tell the tenant in writing of the right to ask for an inspection before moving out and to be present, unless the tenant gave less than two weeks' notice. N.Y. Gen. Oblig. Law § 7-108(1-a)(d)
• A requested move-out inspection happens no earlier than two weeks and no later than one week before the tenancy ends, on at least 48 hours' written notice. Afterward, give the tenant an itemized statement of the repairs or cleaning you propose to deduct, and the tenant may fix them before moving out. N.Y. Gen. Oblig. Law § 7-108(1-a)(d)