Apartments’ Security Deposit
Tenants must pay a security deposit. A security deposit is basically money that a tenant deposits with the owner of the apartment for the repair of any damages to the apartment for which the tenant is responsible. The amount of a security deposit for a rent regulated apartment is usually limited by law to one month’s rent. However, if two months’ security deposit was collected from a tenant by the owner when the apartment first came under rent stabilization, and the same tenant is still occupying the apartment, that tenant remains bound by the two months’ requirement. The next tenant cannot be required to deposit more than one month’s rent as security.
Lease Renewals and their Affect on Security Deposits
When a lease is renewed at a higher rental amount, or the rent is increased during the term of the lease, the owner can collect additional money from the tenant to bring the security deposit up to the new monthly rent. Even though a tenant may be exempt from paying a lease increase because of his or her Senior Citizen Rent Increase Exemption (SCRIE) or Disability Rent Increase Exemption (DRIE), the tenant must still pay the increased security.
Owners Must Notify the Tenants Where their Security Deposits are Held
The owner must put the security deposit in an interest-bearing account in a New York State bank. The owners must also tell the tenant the name and address of the bank and pay the tenant the full annually interest, less 1% of the security deposit per year for the owner’s administrative costs. The tenant can choose whether the interest is to be subtracted from the rent, held in trust until the end of tenancy, or paid in a lump sum at the end of each year.
What Should and Should NOT be Done with the Security Deposits
A security deposit should not be used as the final month’s rent. If the tenant has honored the conditions of the lease and left the apartment in the same conditions it was before the tenant’s tenancy, except for normal wear, the owner must return the full security deposit. If damage was done the owner may apply part or all of the security deposit to the cost of repair.
What to Do if the Owner has Misused the Security Deposit
If the tenant disagrees with the owner over the return of the security deposit or payment of interest, and if the problem is building-wide, the tenant may contact the Consumer Frauds and Protection Bureau of the New York State Attorney General’s Office. Where the problem is not building-wide, the tenant may begin a proceeding in small claims court. The tenant can file a “Tenant’s Complaint of Rent Overcharges and/or Excess Security Deposit” if the owner demands the tenant pays more than one month’s security.