Security Deposits in the state of New York are regulated by New York General Obligations Law §§ 7-103 through 7-109 (or “NYSDL”) and the Housing Stability and Tenant Protection Act of 2019 (“HSTPA”). Certain municipalities may have local laws that supplement state regulations. To ensure full compliance, verify the regulations applicable in your area. 

KEY POINTS AT A GLANCE: New York

Deposit Cap: 1x Monthly Rent 

Holding Requirements: Yes 

Interest Required: Yes (for properties with 6+ units)

Return Window: 14 days 

COLLECTION & HOLDING REQUIREMENTS 

Deposit Cap: Security deposits must be limited to 1x monthly rent. This restriction applies to all rentals, including rent-stabilized units. 

Bank Account Requirements: For rental properties with 6 or more units, security deposits must be:

• Held in an interest-bearing account located in New York State. 
• Kept separate from the landlord/property manager’s personal funds.

Information Provided To Tenant: Landlords/property managers must provide written notice to tenants specifying: 

• The name and address of the bank where their deposit is being held.
• The amount deposited with the bank.

Interest on Deposits: Security deposits should earn interest at the rate designated by the bank for similar deposits. 

• Administrative Fee: The landlord/property manager may earn a 1% administrative fee on security deposits. 
• Tenants may choose to receive the interest:
  
  • (1) added to the security deposit, 
  • (2) applied to rent, or 
  • (3) paid directly to the tenant annually.

RETURN

Timeline: Security deposits must be returned within 14 days of the tenant vacating the property. 

Documentation of Deductions: Within 14 days of vacancy, the landlord/property manager shall provide the tenant with an itemized statement indicating the reasons why the deposit was retained. 

Permissible Deductions: Landlords/property managers may deduct the following from security deposit funds: 

• (1) Non-payment of rent, 
• (2) Damage caused by the tenant beyond normal wear and tear,
• (3) Non-payment of utility charges, and 
• (4) Moving and storage of the tenant's belongings. 

The landlord may not deduct any defects/damages that existed before the tenancy began, as identified during the move-in inspection (if one took place), or for normal wear and tear.

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Penalties:

• Failure to provide an itemized statement and return the remaining security deposit within 14 days shall result in forfeiture of the right to retain the deposit.
• Landlords/property managers who violate NYSDL shall be liable for actual damages.
• Landlords/property managers who have willfully violated NYSDL shall be liable for 2x the security deposit.
• The New York Attorney General may enforce compliance and impose penalties, including up to $2,000 in investigative costs.

SALE OF THE RENTAL PROPERTY 

Within 5 days after the property transfer, the landlord/property manager shall turn over the security deposit to the new owner and notify the tenant of the name and address of the new owner.