New York security deposit law explained for fresh arrivals

Read our guide to understand NYC's security deposit laws, from how much you have to pay to how long the landlord has to return it after the end of the lease.

Ivandzhelin

4 minute read

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Updated on 24 Sep 2024

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Renting

As a tenant in NYC, you should first and foremost know your tenant rights and state rental laws, like the security deposit law in New York. So, when you're searching for homes for rent in New York, you know what you need to pay attention to.

But if you aren't a lawyer yourself, understanding NYC's security deposit laws can be confusing. This is why we've broken them down into a few digestible points like: 1. How much is the security deposit? 2. How long does a landlord have to return a security deposit? 3. Do tenants earn interest on their security deposits?

The security deposit law in New York outlines the terms and conditions under which tenancy security deposits are made. Security deposits, which are paid at the beginning of the tenancy, are equal to a month’s rent and have to be returned to the tenant within 14 days of moving out.

The purpose of a security deposit is to protect the landlord’s property from negligent use and cover any necessary repairs. Other situations in which the security deposit is used include covering unpaid bills, excessive cleaning costs, or loss in monthly rent payments.

Security deposits in New York (city and state) are equal to 1 month’s rent, according to the Housing Stability and Tenant Protection Act of 2019. Regardless of whether the apartment is rent-regulated or not, it’s illegal for landlords to ask tenants to pay a higher security deposit in NYC.

The same Protection Act also prevents tenants from pre-paying rent. This means that when you’re signing your lease, the landlord can only ask for payment equivalent to 2 months' rent upfront (one security deposit and the first month’s rent).

Also, the NYC security deposit law outlines that landlords can’t request an additional security deposit for pets.

According to New York security deposit laws, the landlord has 14 days from the end date of the lease to refund the tenant.

If any repairs have to be paid from the deposit, the landlord has to provide a detailed report of the issues and how much it costs to fix them. The tenant then has the option to fix the issues themselves, or the costs will be deducted from their security deposit.

In case the landlord fails to provide such a report, they have no claim over the security deposit and have to return it in full to the tenant.

Check out our guide to tenant rights and rental laws in NYC to learn more about renting in New York.

Has it been 14 days since you moved out, but your landlord hasn't returned your security deposit yet? The first step is to try to iron out the issue with the landlord. If this doesn’t happen, tenants can send a security deposit demand letter. The letter outlines a list of requests (e.g., a refund of the security deposit). Make sure you include information like:

• How much is the deposit, and why do you have to be refunded?
• The address of the rental property and the dates of the contract
• Contact details and bank account information
• State laws requiring the return of the security deposit within 14 days
• The lawful penalties for not returning the security deposit

Don't forget to include that if your security deposit isn't refunded within a timely manner (e.g., 14 days), you intend to sue your landlord. If the deposit still isn't returned, tenants can file a claim in Small Claims Court.

What to do if your security deposit wasn't refunded but you hesitate to initiate a lawsuit?

Once you've filed the claim, you either settle the dispute with your landlord or continue on with a lawsuit. Yet initiating a lawsuit can be overwhelming, which is why NYC has several other options tenants can choose from to get their security deposit back. Tenants can:

• Use Online Dispute Resolution (ODR) services: a free 24/7 service where a court-assigned mediator helps both parties reach a settlement without having to go to court.
• Use Mediation: a free service where a third-party individual facilitates a conversation between parties to work through a dispute.
• File a complaint with the New York State Department of Home and Community Renewal (DHCR), the New York State Attorney General, or Better Business Burea (BBB) who ensure that the rights of tenants are respected.

Yes, according to the NYC security deposit law, any interest earned on the security deposit that exceeds 1% of the deposit amount has to be returned to the tenant. The landlord keeps any interest below or equal to 1%.

Note that the security deposit interest law applies only to tenants living in a privately owned building with 6+ units. The landlord has to put the security deposit in a New York bank where they're earning a competitive interest to similar accounts.

The tenant chooses when to receive the interest: subtract it from a month’s rent, held by the landlord until the end of the lease, or paid at the end of each year. If there are damages to be fixed at the end of the term, the landlord can use the full extent of the security deposit to fix them (the base deposit + interest).

If the rental amount is being increased, either during the tenancy or when the lease is renewed, the landlord can collect the additional amount from the tenant to match the new monthly rent.

Security deposits shouldn't be used as rent. New York State law requires security deposits to be returned in full. As their purpose is only to cover any damages if they have occurred during the tenancy, security deposits should remain intact.

According to New York security deposit laws, the security deposit belongs to the tenant and is kept by the landlord as insurance in case any damage to the property is caused during the tenancy. So, non-refundable deposits are considered illegal.

No, it doesn’t apply to seasonal rentals. The security deposit law in NYC applies only to rentals over 120 days (4 months). In the case of seasonal rentals, the landlord can also collect the entire rent upfront.

Now that you know everything about security deposit laws in NYC, you're ready to explore rental homes in New York.