New York has many rules that regulate tenant’s security deposits. First and foremost, the state limits how much residential landlords can require. Typically, a security deposit should not exceed one month’s rent.
Landlords can request both the last month of rent and a security deposit when taking on a new tenant. They can also request extra funds to increase the amount held as the security deposit when the rent increases after a lease renewal. Landlords generally need to keep security deposits in an interest-bearing account.
They usually have to return the funds submitted as a security deposit when the tenant eventually vacates the unit and moves elsewhere. Occasionally, landlords may be able to lawfully retain a tenant’s security deposit. When can they keep some or all of the funds deposited at the beginning of the lease?
When the tenants don’t pay their rent
In the scenarios where a landlord must evict a tenant or the tenant leaves suddenly, there could be an unpaid balance due to the landlord. Landlords can potentially use a security deposit as a means of recovering unpaid rent or fees included in the lease.
When the tenant damages the unit
Frequently, landlords make claims against security deposits as a means of paying to repair property damage. In such scenarios, landlords generally need to provide tenants with a thorough inventory of the damage to the unit.
Landlords cannot retain security deposit funds to cover basic wear and tear to a unit, such as a refrigerator failing due to age or yellowing paint caused by solar exposure. Burns in the carpet, holes knocked in the wall while moving and other significant damage to the property may warrant the retention of some or all of the security deposit.
In scenarios where there are disputes about security deposit funds, tenants can initiate civil court proceedings to seek the recovery of their security deposits. Occasionally, landlords may have to pursue litigation in cases where security deposits do not fully cover the damage to the property.
Reviewing the terms of a residential lease and the inventory documents discussing the condition of the property with a skilled legal team can help tenants and landlords determine whether a landlord has grounds to retain a deposit or whether they should return it to the tenant.