The security deposit is one of the more frustrating costs of renting an apartment for many renters. Not having access to a significant portion of your money for the duration of your lease impacts the affordability of many apartments. Additionally, renters must deal with the uncertainty of not only when they will have their deposit returned, but also how much of it.
In this article, we'll explore the ins and outs of security deposits in New York City, including when a landlord is required to return the deposit and the potential penalties for not doing so.
Why do you need a security deposit to rent an apartment?
Security deposits have been a standard practice in the rental industry for decades. Their primary purpose is to protect landlords from potential financial losses incurred by tenants who fail to pay rent, cause property damage, or otherwise violate the terms of their lease agreement.
By requiring a security deposit, landlords are provided some level of security against these losses, since they have access to funds that can be used to cover unpaid rent or repair damages caused by a tenant. Additionally, if renters know that they will have to forfeit their deposit if they damage the apartment, they are more likely to take better care of their apartment during their lease.
Due to renter protection regulation passed in 2019, the maximum security deposit a landlord in In New York City can charge is one month’s rent. This amount is held by the landlord throughout the duration of the lease and is meant to serve as an incentive for tenants to uphold their lease obligations and to leave the property in good condition upon vacating.
Am I entitled to interest earned on my security deposit?
Yes, in NYC the landlord must pay the tenant the interest earned on their security deposit. The landlord must also notify the tenant of the name and address of the bank where the account is being held. The tenant can choose whether the interest earned should be subtracted from their rent, held until the end of the lease, or paid at the end of each year.
The landlord is allowed to keep up to 1% of the security deposit each year to compensate them for any administrative charges. For the past 10 or so years, interest rates have been so low that the interest earned in accounts did not exceed 1% and as a result, nothing had to be paid back to the tenant. However, due to the recent rise in interest rates, savings accounts are now paying interest in excess of 1% and as a result, landlords should be passing that back to tenants.
What Are Landlords Legally Allowed to Deduct from the Security Deposit?
Landlords are able to deduct three main things from the security deposit:
1. Unpaid rent
2. Damage to apartment
3. Unpaid utilities
In order to charge for damage to the apartment, the damage must be in excess of “normal wear and tear”. Normal wear and tear could include: lightly worn carpets, minor scratches on glass, minor fading or scratches on paint, loose door handles, nail holes in drywalls from paintings or pictures and other minor damages.
For unpaid utilities, this must be specified in the lease in order for the landlord to withhold the security deposit. Landlords are permitted to make deductions from a tenant's security deposit under specific circumstances.
Do Landlords Need to Provide Details on Why They Deducted Money from Your Security Deposit?
Yes, landlords are legally obligated to provide an itemized statement detailing any deductions made from the security deposit. This statement should include a clear explanation of the reason for each deduction, as well as the associated costs.
In cases where a landlord fails to provide such a statement within the 14-day period, the tenant may be entitled to the full return of their security deposit, regardless of any potential deductions.
How Quickly Do Landlords Need to Return Security Deposits?
In New York City, landlords are required to return a tenant's security deposit within 14 days after the tenant has vacated the rental property. This time frame allows the landlord to assess the property for any damages or outstanding rent, as well as to perform any necessary cleaning. If there are no deductions to be made, the landlord must return the full security deposit to the tenant within the 14-day period.
Is There Any Penalty for Landlords if They Don't Return the Deposit on Time?
If a landlord fails to return a security deposit or provide an itemized statement of deductions within the 14-day period, the tenant may be entitled to take legal action against the landlord. This can involve filing a complaint with the New York State Attorney General's Office or pursuing a small claims court case.
Penalties for landlords who fail to comply with security deposit laws can vary, but they may be required to pay the tenant the full amount of the deposit, in addition to any other damages awarded by the court. In some cases, the landlord may also be subjected to additional fines or penalties for violating state and local regulations.
Wrapping it up
Navigating the complexities of security deposits in New York City can be a daunting task for tenants. By understanding the legal requirements surrounding security deposits, as well as the rights and responsibilities of both parties, tenants can better advocate for themselves and ensure that they are treated fairly throughout the rental process.
To recap, landlords in New York City are required to return security deposits within 14 days after the tenant vacates the property. They are also obligated to provide an itemized statement detailing any deductions made from the deposit. Failure to comply with these requirements can result in penalties for the landlord, including the potential return of the full deposit amount to the tenant and additional fines.
As a tenant, it's important to be aware of your rights and to keep documentation of the condition of the property when you move in and out. By doing so, you can protect yourself and ensure that you receive the appropriate amount of your security deposit back when your lease comes to an end.
For more tips and tricks on navigating the apartment rental process, be sure to check out our Renter Resources page here.