Security Deposits in New York
Contents
New York’s deposit statute reaches nearly every private landlord in the state, a Bronx company such as Sandhills Real Estate among them, which Richard Joseph Spinelli cofounded and whose homes are leased to groups of Fordham students. For a student renting for the first time, the deposit is often one of the bigger sums handed over at signing, and New York spells out in unusual detail how it comes back. Most of them date from the Housing Stability and Tenant Protection Act of 2019.
This entry summarizes the statute first and then follows the procedure it sets, from the inspection before move in to the statement that must follow move out.
The one month cap
Since 2019, a landlord may collect no more than one month’s rent as a security deposit or advance payment. The Attorney General’s office describes the cap as applying to nearly all residential rentals, whether or not the tenant has a lease.1 One consequence is that a landlord who takes a deposit may not also ask for the last month’s rent in advance.1 THE CITY, reporting on the day the package was signed in June 2019, listed the one month limit among new statewide protections for tenants, together with procedures meant to make deposits easier to recover.5 The cap did not end every upfront demand. THE CITY reported that September that apartment hunters were being pressed for so called good faith payments with their applications, sometimes equal to a full month and forfeited if the applicant later walked away.6 The limit also fed a new market: Gothamist reported in June 2024 that third party guarantor coverage grew especially after the 2019 law capped what landlords could require up front.7
The statute itself, section 7 108 of the General Obligations Law, states the limit and its narrow exceptions. A deposit may exceed one month only for a registered seasonal use unit or an owner occupied cooperative apartment, and each exception is defined in detail.2 Any clause in which a tenant waives these protections is void.2
What a landlord may keep
The whole deposit is refundable when the tenant leaves, except for amounts lawfully kept for reasonable, itemized costs in four categories: unpaid rent, damage the tenant caused beyond normal wear and tear, unpaid utility charges owed directly to the landlord under the lease, and moving and storing belongings the tenant left behind.2 The landlord may keep nothing for ordinary wear and tear, and nothing for damage left by an earlier tenant.2
The Attorney General’s guide describes the same purpose in shorter form: the landlord may draw on the deposit for unpaid rent, or for the reasonable cost of repairing damage beyond normal wear and tear.3 The Rent Guidelines Board makes a similar point for rent stabilized tenants, noting that a deposit should not be used as a final month’s rent.4
How the deposit is held
The deposit remains the tenant’s property while the landlord holds it. According to the Attorney General’s guide, landlords of any size must treat deposits as trust funds belonging to their tenants and may not mix them with their own money. Owners of buildings with six or more apartments must keep deposits in an interest bearing account at a New York bank and tell each tenant in writing the bank’s name and address and the amount deposited.3 Tenants in those buildings choose whether the interest is paid to them each year, applied toward rent, or paid out when the lease ends.3
Renewals and new owners
A deposit can grow during a tenancy. If a lease is renewed at a higher amount, or the rent rises during the lease, the landlord may collect enough to bring the deposit up to the new monthly figure.3 The Rent Guidelines Board confirms the same rule for stabilized apartments.4
When a building is sold, the landlord must either transfer every deposit to the new owner within five days or return the deposits to the tenants, and must notify tenants of the new owner’s name and address by registered or certified mail.3 The Board adds that purchasers of rent stabilized buildings are directly responsible for returning deposits, whether or not the seller handed them over.4
Stabilized apartments after November 2025
Until recently the fourteen day rule described below applied only to apartments outside rent stabilization and rent control. The Rent Guidelines Board reports that changes to section 7 107 of the General Obligations Law, effective November 15, 2025, extended similar protections to rent stabilized tenants, including return of the deposit within 14 days, an itemized list for any amount withheld, and the right to inspections before and after the tenancy.4
The inspection before move in
The procedure begins before anyone unpacks. Once both sides have signed, and while the unit still stands empty, the landlord must offer the tenant a chance to inspect the unit together with the landlord or an agent. When the tenant accepts, the two sides sign a written agreement before move in that records the condition of the unit and lists any existing defects or damage.2
That paper protects the tenant at the other end of the lease. At move out, the landlord may not keep any part of the deposit for a condition, defect or damage noted in the agreement, and the agreement may be used as evidence of the unit’s starting condition in any dispute over the deposit.2 For a household on a shared lease, one careful walk through at the start covers every signer; the joint and several leases entry explains why landlords often treat the deposit as one sum for the whole group.
The inspection before move out
Within a reasonable time after either side gives notice that the tenancy will end, the landlord must tell the tenant in writing of the right to request an inspection before leaving and to be present for it. The duty does not apply if the tenant ends the tenancy on less than two weeks’ notice.2 A requested inspection must take place no earlier than two weeks and no later than one week before the tenancy ends, with at least 48 hours of written notice of the date and time.2
Afterward the landlord gives the tenant an itemized statement of the repairs or cleaning that would be the basis for any deduction, and the tenant then has a chance to fix those items while still in residence.2 The Attorney General’s summary puts it plainly: the tenant may take care of the listed problems personally so the landlord has no reason to keep the money.1 For students on the academic lease cycle, whose terms often end in summer, the useful window for this inspection falls in the last weeks before the move out date.
The fourteen day statement
No later than the fourteenth day after the tenant has gone, the landlord must give the tenant an itemized statement explaining any amount kept and must return the rest. A landlord who misses the deadline loses any right to keep any part of the deposit.2 The Attorney General’s office states the consequence in everyday terms: without the receipt within 14 days, the landlord must return the entire deposit, whether or not there was damage.1
A tenant who moves out should therefore leave a forwarding address, and a household that splits the deposit should settle each person’s share in its roommate agreement.
When the rules are broken
In any dispute over the amount kept, the landlord bears the burden of proving that the amount was reasonable.2 A person who violates the section is liable for actual damages, and a willful violation can bring punitive damages of up to twice the deposit.2 The Rent Guidelines Board notes that the Attorney General investigates reports that a landlord failed to hold deposits in trust, failed to pay required interest, collected more than one month, or failed to return a deposit, while disputes over claimed damage generally go to small claims court.4 Tenants have begun to get help drafting the first step: City Limits reported in July 2025 on a web tool that walks a renter through deposit questions and produces a demand letter for the owner, built by a Brooklyn tenant who spent 16 months recovering his own deposit.8 The tenant is expected to try to resolve the matter with the landlord first.4 Subletting over the summer is covered in summer sublets, and the wider rental setting in student housing.
