Security Deposits in NYC

As simple as the rental process may be for some landlords, unexpected issues can arise during the tenancy and even after.

In this article, we’ll address security deposits, what they are and how they function. We’ll address six common questions about security deposits, ensuring you’re well-informed and to empower you to navigate rental agreements confidently.

What Exactly Are Security Deposits

Security deposits exist as another layer of security for both landlords and tenants. It is a way for both parties to ensure that they are ready and willing to responsibly work together. Usually, tenants are expected to pay the first month of rent upfront. 

If nothing happens to the property and the tenant doesn’t miss any payments, landlords return the deposit when the tenant chooses to end their lease. It’s a way to establish trust and ensure that sides are held accountable. 

We have put together answers to questions many landlords may have about getting and holding on to a security deposit from a tenant.

6 Must Ask Questions About NY Security Deposits

Question 1: How high can security deposits go up front?

  • How much you can charge for a security deposit as a landlord in NYC depends on the type of property you are offering. Landlords may not ask for more than one month’s rent upfront for a security deposit, whether the apartment is rent-stabilized or not.

Question 2: Do landlords pay interest on the security deposit?

  • This, too, depends on the type of property you are renting out. In rent-stabilized apartments, this interest is paid annually, whereas in non-rent-stabilized apartments, paying interest on the deposit is not always required. 

 

  • Tenants are entitled to receive interest on your security deposit if the building has six or more apartments or if, regardless of the size of the building, you as the landlord have  placed the deposit in an interest-bearing account.

Question 3: When can a landlord make deductions from the collected security deposit?

  • As a landlord, you can use this money to cover any damages to the property that go beyond normal wear and tear from the tenant. You can also use it as a safety net in case your tenant fails to pay the rent. Tenants are not allowed to use their security deposit to cover their last month’s rent. These expenses can be deducted from the security deposit. 

 

  • You have fourteen (14) days after the tenant vacates the apartment to provide an itemized statement indicating the specific damages and amount of the deposit that you will deduct and the remaining portion of the  deposit that will be returned.

 

  • If not done within those 14 days, you must return the full deposit amount to the outgoing tenant.

Question 4: What happens if there is damage beyond the security deposit amount?

  • If your tenant has damaged the property or has outstanding unpaid bills that exceed the security deposit amount, the first thing you must do is assess the situation. Afterwards, the matter could go to court if a settlement is not reached.

Question 5: What is the time-frame for returning the security deposit?

  • In New York City, security deposits must be returned within 14 days, either with deductions or without.

Question 6: Where to turn in case of security deposit issues?

  • If there is a dispute over a security deposit with a tenant, these can be sorted in small claims court.

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