Owning and leasing commercial or residential properties in New York can be a great investment. It can also, however, bring with it certain stresses, such as having to collect rent and ensuring that your tenants do not cause any damages. You can protect yourself in both regards by collecting a security deposit as a condition of a lease. Yet as many of those that we here at Tane Waterman & Wurtzel, P.C. can attest to, issues regarding the management of security deposits can often be the source of landlord-tenant disputes. Thus, you should know exactly what the law requires of you in this regard in order to avoid such tensions.
According to the New York State Attorney General’s Office, if your security deposits are rent-based, you are allowed to ask for more if, throughout the term of the lease, the rent payment increases. Tenants would owe whatever is needed to equal the amount of the new payment. The deposit money may be used to either cover missed rent payments or the cost of repairs that are needed doe damages to the property that the tenant causes. Whatever is remaining of the deposit must be returned to the tenant when their lease expires. If you sell the property, the security deposits of current tenants must be transferred to the new owner within five days of the transaction being finalized.
If you own a multi-unit property (one containing more than six units), all security deposits must be placed in an interest-earning New York state bank account. You may charge up to one percent of the deposit’s value annually to maintain the accounts, but interest earned must be paid back to the tenant. You can learn more about managing tenant matters by continuing to explore our site.