Frequently Asked Questions (FAQ)

Security Deposits

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Should I be getting interest on my security deposit?

If the building has six or more units the landlord must pay interest, if any, on your security deposit. The owner may keep one percent of the deposit amount each year as an administrative fee. If the building has fewer than six units and the owner deposits the security in a bank, the interest also belongs to the tenant, less one percent for administration.

For example: A tenant pays a security deposit of $1,000. The landlord places the deposit in an interest-bearing account paying 1.1%. At the end of the year the account will have earned interest of $11. The tenant is entitled to $1 and the landlord may retain $10, 1% of the deposit, as an administrative fee. However, be aware that with interest rates averaging below 1% in recent years, tenants may not be eligible to receive any interest at all.

For more information, see the security deposit section of the NY State Attorney General's Tenant's Rights Guide.

On what grounds can my landlord withhold the security deposit?

The security deposit must be returned to you with interest. Generally, the landlord can make deductions as reimbursement for the reasonable cost of repairs beyond normal wear and tear (if you have damaged the apartment); or, as reimbursement for any unpaid rent.

How can I get an accounting of my security deposit?

The law requires the landlord of a building with six or more units to put your security deposit in a New York bank account earning interest at the prevailing rate. You should have been informed in writing of the bank's name and address and the amount of the deposit. For more information, HCR Fact Sheet #9 on Security Deposits.

You probably have two options. You can contact the Consumer Frauds and Protection Bureau of the NYS Attorney General's Office. This office will attempt to persuade your landlord to follow the law. You may also be able to file a complaint with NYS Homes and Community Renewal (HCR), the state agency which administers the rent laws.

My building has a new owner. Is the new owner responsible for our security deposits?

Yes, the new owner of the building the landlord is responsible for security deposits. When a building is sold or title is transferred in foreclosure, the landlord must transfer all security deposits to the new owner within five days, or return the security deposits to the tenants. Landlords must notify the tenants, by registered or certified mail, of the name and address of the new owner. Purchasers of rent stabilized buildings are directly responsible to tenants for the return of security deposits and interest. This responsibility exists regardless of whether the new owner received the security deposits from the former landlord.

For more information, see the security deposit section of the NY State Attorney General's Tenant's Rights Guide.

All leases will remain valid even if the building is transferred through mortgage foreclosure.

My building was sold. How do I collect unpaid interest on my security deposit?

If a building is sold, the old landlord must transfer all security deposits to the new owner, who is responsible for returning any security deposits and interest accrued to tenants (minus the annual 1% administrative expense that is allowed). However, be aware that with interest rates averaging below 1% in recent years, tenants may not be eligible to receive any interest at all.

If the new landlord refuses to return the interest that is owed, you have some options: you can contact the Consumer Frauds and Protection Bureau of the NYS Attorney General's Office. This office will attempt to persuade your landlord to follow the law. You may also be able to file a complaint with NYS Homes and Community Renewal (HCR), the state agency which administers the rent laws.

For more details, HCR Fact Sheet #9 on Security Deposits; the security deposit section of the NY State Attorney General's Tenant's Rights Guide; and ourLegal Assistance page, on how you may attempt to recover your rent security deposit and interest in Small Claims Court.

What are the time limits for returning security deposits?

The landlord must return the security deposit, less any lawful deduction, to the tenant at the end of the lease or within a reasonable time thereafter. A landlord may use the security deposit: (a) as reimbursement for the reasonable cost of repairs beyond normal wear and tear, if the tenant damages the apartment; or (b) as reimbursement for any unpaid rent.

Usually, a 'reasonable' amount of time is in the neighborhood of 30-60 days; however, the definition of 'reasonable' is not up to you or us to decide.

Ultimately, the return of your deposit would be decided by the Attorney General's Office or a Small Claims Court judge. If you feel you have exhausted attempts to get your deposit returned through your former landlord, you may wish to contact the NYS Attorney General's Office.

For more information on small claims court in New York City, see ourLegal Assistance page, as well as this Guide to Small Claims Court on recovering rent security deposits and interest in Small Claims Court.

Can I sue for the return of my security deposit?

You can file a claim in Small Claims Court. You can also contact the NYS Attorney General's Office. They accept tenant complaints involving security deposits. After a tenant files a complaint, the Attorney General will contact the landlord, providing him/her with the opportunity to reply. The Attorney General's approach is to mediate a resolution by informing the landlord of the obligations of the law and the Attorney General's authority to enforce the law. A landlord who has no damage claim against a former tenant, and who is merely trying to keep the deposit, may respond to this pressure.

Needless to say, if the landlord claims, for example, $900 for actual damages to the apartment, and can document these damages, and your rent is $900 or less, he/she can rightfully claim the security deposit.

Unlawfully withholding a security deposit or collecting excess security may be considered an unlawful overcharge for rent regulated tenants. If deliberate, aggrieved tenants might be eligible for treble damages in an overcharge proceeding by filing a complaint with NYS Homes and Community Renewal (HCR), the state agency which administers the rent laws.

For more information on small claims court in New York City, see ourLegal Assistance page, as well as this Guide to Small Claims Court on recovering rent security deposits and interest in Small Claims Court.