New York Security Deposit Collections & Holdings

New York Security Deposit Collections & Holdings

Last Updated: January 2, 2023 by Ashley Porter

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.

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. However, the total security deposit cannot exceed one month’s rent unless the residence is exempt. Landlords cannot exceed the limit by giving them another name like “pet deposit” or “damage deposit.”

This law does not prevent landlords from adding a monthly pet premium.

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 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 should follow these same rules.

How Are Security Deposits Accounted for in New York?

Security deposits are not considered taxable income when they are 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