New York security deposit and move-in inspection rules

How much can the deposit be?

A security deposit or advance may not exceed one month's rent. Exceptions: registered seasonal-use units and owner-occupied cooperative apartments; and subdivision 1-a does not cover units under the city rent and rehabilitation law or the emergency housing rent control law, licensed continuing-care/assisted-living/adult-care facilities and certain senior communities. Rent-stabilized units have the same one-month cap under § 7-107(2).

“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.”

“This section shall apply to all dwelling units in residential premises, unless such dwelling unit is specifically referred to in section 7-107 of this title.”

“No deposit or advance shall exceed the amount of one month's rent, under any contract for the lease or tenancy of a dwelling unit subject to this section.”

Where the deposit must be kept

The deposit remains the tenant's money, held in trust and not mixed with the landlord's own funds. If placed in a bank, it must be a bank with a place of business in New York, and the landlord must notify each tenant in writing of the bank's name and address and the amount deposited.

“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”

“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.”

Move-in inspection and photos

After lease signing but before move-in, the landlord must offer the tenant a joint inspection. If the tenant asks for it, both sign a written agreement on the unit's condition noting existing defects, and the landlord cannot later deduct for anything noted in it.

“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.”

Inspection before move-out

Once either side gives notice of ending the tenancy (unless the tenant gives under two weeks' notice), the landlord must tell the tenant in writing of the right to a pre-move-out inspection and to be present. If requested, it happens 1-2 weeks before the end of the tenancy with at least 48 hours' written notice; the landlord then gives an itemized list of proposed deductions and the tenant may fix them before leaving.

“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.”

When the deposit must be returned

Within 14 days after the tenant moves out, the landlord must give an itemized statement and return the rest of the deposit. Missing the 14-day deadline forfeits the landlord's right to keep any part of the deposit.

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

What the itemized statement must include

The statement must be itemized and indicate the basis for any amount kept. Deductions must be for reasonable and itemized costs, and in a dispute the landlord bears the burden of proving the amount kept was reasonable.

“Within fourteen days after the tenant has vacated the premises, the landlord shall provide the tenant with an itemized statement indicating the basis for the amount of the deposit retained, if any, and shall return any remaining portion of the deposit to the tenant.”

“In any action or proceeding disputing the amount of any amount of the deposit retained, the landlord shall bear the burden of proof as to the reasonableness of the amount retained.”

What can and cannot be deducted

The landlord may keep only reasonable, itemized costs for unpaid rent, tenant-caused damage beyond normal wear and tear, unpaid utilities payable to the landlord under the lease, and moving/storing the tenant's belongings. Nothing may be kept for ordinary wear and tear or damage caused by a prior tenant.

“except for an amount lawfully retained for the reasonable and itemized costs due to non-payment of rent, damage caused by the tenant beyond normal wear and tear, non-payment of utility charges payable directly to the landlord under the terms of the lease or tenancy, and moving and storage of the tenant's belongings.”

“The landlord may not retain any amount of the deposit for costs relating to ordinary wear and tear of occupancy or damage caused by a prior tenant.”

Interest on the deposit

For property with six or more family dwelling units, the deposit must be placed in an interest-bearing account at a New York bank earning the prevailing area rate. The landlord may keep 1% per year as an administration fee; the remaining interest belongs to the tenant and is held in trust or paid annually.

“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”

“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”

Penalties for keeping a deposit wrongly

A violation makes the landlord liable for actual damages; a willful violation adds punitive damages of up to twice the deposit. Any lease clause waiving these rights is void.

“Any person who violates the provisions of this subdivision shall be liable for actual damages, provided a person found to have willfully violated this subdivision shall be liable for punitive damages of up to twice the amount of the deposit or advance.”

“Any agreement by a lessee or tenant of a dwelling waiving or modifying his rights as set forth in this section shall be absolutely void.”

If the property is sold

On sale or assignment, the landlord must turn the deposit over to the new owner within five days and notify the tenant by registered or certified mail of the new owner's name and address; the new owner is then responsible for returning it (and is also liable for deposits it had actual knowledge of if not turned over).

“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.”

“at the time of the delivery of the deed or instrument or assignment or within five days thereafter”

“the transferee of such security deposit is hereby made responsible for the return thereof to the tenant or licensee”

“the grantee or assignee of the leased premises shall also be liable to such tenant, upon conveyance of such leased premises, for the repayment of any such security deposit, plus accrued interest, as to which such grantee or assignee has actual knowledge.”