| Quick Facts | Answer |
| Maximum / Limit | 1 Month’s Rent |
| Receipt Requirement | None |
| Inventory Requirement | Required (upon request) |
| Interest Requirement | Required (buildings with 6+ units) |
To learn about laws on security deposit returns in New York, click here.
Some cities and counties may have regulations which are different than those presented here. Always check local laws.
Maximum Security Deposit Allowed in New York
The Housing Stability and Tenant Protection Act limits the maximum security deposit to one month’s rent, including units protected by rent control or rent stabilization.
The following types of housing are governed by different rules:
- Units subject to the city rent and rehabilitation law or the emergency housing rent control law
- Continuing care retirement communities
- Assisted living providers
- Adult care facilities
- Recognized senior residential communities
- Not-for-profit independent retirement communities
- Owner-occupied cooperative apartments (exempt – no limit)
- Seasonal use dwellings (exempt – no limit)
Can Landlords Charge an Additional Pet Deposit in New York?
In New York, landlords can charge a pet deposit, except for service dogs and emotional support animals. The total security deposit still cannot exceed one month’s rent unless the residence is exempt. Landlords cannot exceed this limit by asking for money under another label, like “pet deposit” or “damage deposit.”
This law does not prevent landlords from adding a monthly pet premium (“pet rent”) in exchange for the right to keep an animal on the property.
How Much Rent Can a Landlord Collect Upfront in New York?
In addition to collecting the first month’s rent in advance, landlords in New York can only collect one additional month’s rent in advance as a security deposit. The landlord cannot also collect last month’s rent in advance, so the total amount that can be collected under any circumstances is equal to two months’ rent.
Security Deposit Collections in New York
When collecting a security deposit, landlords in New York must notify the tenant of their right to inspect the property before occupancy.
If the tenant chooses to do an inspection, the landlord and tenant should sign a written statement documenting the condition of the unit and agreeing that the damages and defects discovered will not be deducted from the security deposit.
Do Landlords Have To Provide a Receipt for the Security Deposit in New York?
Landlords are not required to provide a receipt for the security deposit in New York, but if a landlord places the security deposit in a bank, the landlord must provide written notice to the tenant of the name and address of the bank, and the exact amount of security deposit that belongs to that tenant.
What Obligations Do Landlords Have To Establish the Condition at Move-in in New York?
When collecting a security deposit in New York, landlords must give tenants the option to inspect the unit and document the existing condition prior to move-in.
Security Deposit Holdings in New York
New York law requires landlords to hold security deposits separate from other funds. If the rental property has six or more units, the security deposits must be placed in an interest-bearing account in a New York bank. Landlords must notify tenants in writing of the name and address of the financial institution where the security deposit is held.
If the rental property consists of five or fewer units, the landlord may choose where to hold the security deposits as long as they are not commingled with other funds.
Are Tenants Entitled to Interest on Their Security Deposit in New York?
If landlords collect security deposits for a building with six or more units, they must place security deposits in an account that gains interest at the prevailing rate. All interest belongs to the tenant except the landlord may take 1% of the interest annually as an administration fee.
Landlords may credit the tenant for their interest due at the end of the lease or annually.
If the building has five or fewer units and the landlord chooses to hold security deposits in an interest-bearing account, they must follow these same rules.
How Are Security Deposits Accounted for in New York?
Security deposits are not considered taxable income when collected.
What Happens to a Security Deposit When the Property is Sold in New York?
When a property is sold in New York, the original landlord has 5 days after the sale of the property to do the following:
- Transfer the security deposits to the new owner
- Notify the tenants of the transfer
- Provide the tenants with the name and address of the new owner via certified mail
Sources
- 1 N.Y. Gen. Oblig. Law § 7-108(1-a)(a)
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No deposit or advance shall exceed the amount of one month’s rent, unless the deposit or advance is for a seasonal use dwelling unit as provided for in subdivisions four and five of this section, or unless the deposit or advance is for an owner-occupied cooperative apartment as provided for in subdivision six of this section.
Source Link - 2 N.Y. Gen. Oblig. Law § 7-108(1-a)(c) & (d)
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(c) After initial lease signing but before the tenant begins occupancy, the landlord shall offer the tenant the opportunity to inspect the premises with the landlord or the landlord’s agent to determine the condition of the property. If the tenant requests such inspection, the parties shall execute a written agreement before the tenant begins occupancy of the unit attesting to the condition of the property and specifically noting any existing defects or damages. Upon the tenant’s vacating of the premises, the landlord may not retain any amount of the deposit or advance due to any condition, defect, or damage noted in such agreement. The agreement shall be admissible as evidence of the condition of the premises at the beginning of occupancy only in proceedings related to the return or amount of the security deposit.
(d) Within a reasonable time after notification of either party’s intention to terminate the tenancy, unless the tenant terminates the tenancy with less than two weeks’ notice, the landlord shall notify the tenant in writing of the tenant’s right to request an inspection before vacating the premises and of the tenant’s right to be present at the inspection. If the tenant requests such an inspection, the inspection shall be made no earlier than two weeks and no later than one week before the end of the tenancy. The landlord shall provide at least forty-eight hours written notice of the date and time of the inspection. After the inspection, the landlord shall provide the tenant with an itemized statement specifying repairs or cleaning that are proposed to be the basis of any deductions from the tenant’s deposit. The tenant shall have the opportunity to cure any such condition before the end of the tenancy. Any statement produced pursuant to this paragraph shall only be admissible in proceedings related to the return or amount of the security deposit.
Source Link - 3 N.Y. Gen. Oblig. Law § 7-103(1) & (2)
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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.
Source Link - 4 N.Y. Gen. Oblig. Law § 7-103(2-a)
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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.
Source Link - 5 N.Y. Gen. Oblig. Law § 7-105(1)
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1. Any person, firm or corporation and the employers, officers or agents thereof, whether the owner or lessee of the property leased, who or which has or hereafter shall have received from a tenant or licensee a sum of money or any other thing of value as a deposit or advance of rental as security for the full performance by such tenant or licensee of the terms of his lease or license agreement, or who or which has or shall have received the same from a former owner or lessee, shall, upon conveying such property or assigning his or its lease to another, or upon the judicial appointment and qualifying of a receiver in an action to foreclose a mortgage or other lien of record affecting the property leased, or upon the conveyance of such property to another person, firm or corporation by a referee in an action to foreclose a mortgage or other lien of record affecting the property leased if a receiver shall not have been appointed and qualified in such action, at the time of the delivery of the deed or instrument or assignment or within five days thereafter, or within five days after the receiver shall have qualified, deal with the security deposit as follows:
Turn over to his or its grantee or assignee, or to the receiver in the foreclosure action, or to the purchaser at the foreclosure sale if a receiver shall not have been appointed and qualified the sum so deposited, and notify the tenant or licensee by registered or certified mail of such turning over and the name and address of such grantee, assignee, purchaser or receiver.
Source Link
