CTRC Fact Sheet Index

TenantNet note: These Fact Sheets were published by CTRC in the mid-1990's. Some information will be out-of-date. As far as we know, there have been no updates to these fact sheets. While much of the information may still be valid, the reader should exercise caution.

CTRC Fact Sheets -- reproduced with permission.

The Community Training Resource Center (CTRC) is a city-wide not-
for-profit organization that champions the rights of modest and
low-income tenants and promotes the preservation, improvement,
and expansion of affordable housing. CTRC provides training and
technical assistance for neighborhood housing groups, community
based organizations, legislative staffs and social service

CTRC produces fact sheets on tenants' rights, develops and
publishes research reports, and provides a written guide to New
York City government processes. CTRC advocates on budget policies
that affect housing and related services in low-income
neighborhoods. CTRC has led the campaign for the improvement and
expansion of the city's Housing Maintenance Code inspection and
enforcement services.

CTRC Fact Sheet #006


A rent security deposit is an amount of money, separate from the
rent itself, collected from the tenant and held by the landlord
as security against loss due to the misdeed of the tenant. A rent
security deposit may be held for the duration of the tenancy,
including renewals of the initial lease. At the end of the
tenancy, the landlord may claim all or a portion of the rent
security deposit to cover unpaid rent or damage to the rented
property caused by the tenant beyond "normal" wear and tear. Rent
security deposits are authorized and regulated by the New York
State General Obligations Law (GOL), which affects all New York
State tenants. The GOL also contains special provisions for
tenants in apartments subject to the Rent Control and Rent
Stabilization Laws.

General Rules

The GOL provides that all rent security deposit moneys, plus
accrued interest, if any, be held in trust by the landlord,
separate from the landlord's own funds. The term "in trust" means
that the moneys collected for a rent security deposit remain the
property of the tenant and must be placed in an individual tenant
account. In buildings of six or more apartments, the law requires
all deposits be held in interest-bearing accounts in a bank
within New York State. In smaller buildings, the landlord is not
required to hold deposit moneys in an interest-bearing account,
but if he does, the interest earned becomes the property of the
tenant. When a security deposit bank account is opened (or
changed), the landlord must notify each affected tenant of the
name and address of the banking institution, and the amount
currently held. Some landlords include a clause in the lease that
the rent security deposit will be applied to the last month's
rent. This is legal, but does not relieve the landlord of the
obligation to put the deposit in a separate bank account,
interest-bearing, if appropriate. A landlord may not commingle
(mix) security deposit moneys with his own; if he does, a tenant
has the right to ask a court to rule that, as such, the landlord
has converted the trust moneys to personal use and that he, the
landlord, should lose the right to retain a security deposit.

Amount of Deposit

Landlords of unregulated units can demand any amount of deposit.
In contrast, in New York City, and in the counties of
Westchester, Nassau and Rockland and other areas in New York
State subject to the Rent Control or Rent Stabilization Laws, the
landlord of the regulated unit can hold a security deposit not
greater than one month's current legal rent. The only exception
to this rule affects the few tenants who made a deposit greater
than one month's rent prior to the date their apartment became
subject to rent stabilization and who have been in continuous
occupancy since then; that greater deposit may continue to be
held, but not increased. A landlord who violates the one-month's
rent limitation is overcharging the regulated tenant, who should
file a complaint of overcharge with the New York State Division
of Housing and Community Renewal on its Form RA-89. The tenant
should claim an award of triple damages (three times the amount
of overcharge). (See our factsheet, Overcharges Under NYC Rent

When can a Security Deposit be Demanded?

Typically, a rent security deposit will be authorized by a clause
in the first, or vacancy, lease, and paid at the time the tenant
signs the lease or takes occupancy. The landlord may omit a
provision to hold a rent security deposit, or agree to hold an
amount less that a full month's rent. For unregulated tenants, a
security deposit lease clause could be added to a renewal of a
lease. For rent stabilized tenants, however, the NYC Rent
Stabilization Code prohibits the addition of such a clause if the
tenant's first lease did not contain a clause authorizing a
security deposit. Landlords sometimes collect a rent security
deposit without giving a lease. Since the tenant would then have
no documentation of the deposit, the tenant should take care to
get a receipt clearly showing that a deposit was given. Even
without a lease, the rent security deposit provisions of the GOL

When can a Security Deposit be Increased?

A lease renewal usually extends the landlord's right to a
security deposit contained in the first lease, and may provide
for an increase in the rent security deposit to the level of the
new monthly rent. For regulated units, where the landlord is
limited to a security deposit of no more than one month's rent,
in calculating the new rent security deposit requested, accrued
interest if not distributed to the tenant, should be credited.

Interest Payments

Interest earned on the tenants account must be at the prevailing
rate for similar types of accounts in the bank's geographic area.
All interest earned becomes the property of the tenant, except
for one percent which the landlord may retain to compensate for
the cost of administrating the account. At the tenant's choice,
the remainder of the interest may be (1) annually paid to the
tenant, (2) applied to rent, or (3) allowed to accrue in the

Failure to Hold in Separate Account

If there is evidence that the landlord has not deposited the rent
security deposit in a separate, interest-bearing bank account,
the tenant has the right to demand its return. Failure to receive
annual tax forms notifying the tenant of interest earned on the
account or the landlord's refusal to respond to requests
regarding disposition of the earned interest, might be such
evidence. First, there should be a written request to the
landlord asking him for information on the current status of the
rent security deposit moneys and the name and address of the
banking institution where the account is held. If there are
grounds to believe that the moneys are not properly deposited,
state those grounds for the record and demand that the deposit be
held according to law or returned to you. Request the landlord
reply in writing within ten business days. If he does not, you
can file a complaint with the Attorney General (see below). For
regulated tenants, a complaint of overcharge (as above) should
also be filed with DHCR, stating that the landlord, by mixing the
deposit with his own funds, has collected an overcharge.

Protection Against Future Claims

When tenants move out, landlords often make claims against rent
security deposits and refuse to return them. They may allege that
the tenant damaged their property beyond normal wear and tear.
Certain steps can and should be taken to avoid losing all or some
of a deposit when vacating an apartment.

Upon moving in, tenants should inspect the apartment with the
landlord. Existing problems should be identified and either
listed in the lease, or in a separate letter from him. If the
landlord refuses to perform the inspection, the tenant with a
friend, who can be a witness later, should do so. Documentation,
including photographs, should be sent by certified mail to the
landlord. These steps are best taken after the lease has been
executed so that the landlord cannot retaliate and withdraw his
lease offer.

Upon vacating, the tenant should leave the apartment in "broom-
clean" condition, meaning no trash or discarded possessions left
in the apartment. The tenant should also make whatever minor and
trivial repairs he can (spackling holes in the plaster made by
picture hook nails, etc.) in order to deny the landlord any
excuse for deducting his invariably exaggerated costs for making
those repairs from the security deposit.

Return of Deposit

The tenant should notify the landlord, at the time specified in
the lease and in writing, of plans not to renew the lease. A
vacate date should be given. At the same time, the tenant should
also include a demand for the return of the security deposit and
remind the landlord of apartment conditions that pre-dated the
occupancy if they still exist.

If the tenant fails to notify the landlord of intention to
vacate, especially if the vacate date does not correspond with
the lease termination date, it will be easier for the Landlord to
refuse to return the rent security deposit. At any rate,
landlords will almost never return a rent security deposit until
after the tenant has vacated.

Many landlords will simply ignore a tenant's demand to return a
deposit. They know that the burden to act will fall on the
tenant, and that the tenant, either not knowing his rights, or
out of fear, or apathy, often will do nothing further.
Experienced tenants anticipate that the landlord will not return
a deposit and counter by not paying the last month's rent. This
practice is not authorized by the lease or the law, but does
serve to circumvent the loss of the deposit by placing the burden
on the landlord to sue to collect the last month's unpaid rent
from a tenant no longer in occupancy.

Taking this route has a potential disadvantage. The tenant cannot
safely use that landlord as a credit reference when trying to
rent another apartment. However, assuming that payment of the
last month's rent is made, there are a number of strategies for
forcing the return of a rent security deposit.

Small Claims Court

Small Claims Court, a division of the Civil Court in New York
City, has jurisdiction over disputes and claims involving amounts
up to $2,000. Such claims include unreturned rent security
deposits. The court's process is simple, a lawyer is not required
and cases are heard in the evening. Filing a Small Claims summons
costs about five dollars, and notice of the summons is sent by
the court to the landlord, telling him of the claim and the date
of the hearing.

Compared to all other strategies, Small Claims Court may be the
most effective. Just receiving a summons may induce the landlord
to return all or a portion of the deposit. If not, there will be
an appearance before a judge or arbitrator, (landlord's choice;
an arbitrator speeds the process, but the right of appeal is
waived). If the landlord runs the building as a corporation, he
must appear represented by an attorney. This can be expensive and
may motivate him to return the security deposit.

A major problem with the Small Claims approach is the difficulty
of collecting the amount of a judgment. If the tenant wins, the
landlord may refuse to pay and force the tenant to employ the
services of a Sheriff or Marshal to attach the landlord's assets.
Tenants are advised that an earlier settlement worked out with
the landlord, might be a better resolution than winning and then
trying to collect the court-awarded judgement. A booklet called A
Guide to Small Claims Court is available free from the various
offices of this court around the city.

Attorney General

The New York State Department of Law, headed by the Attorney
General (AG), accepts tenant complaints involving security
deposits. After a tenant files a complaint on their form
(available by calling 212-416-8000), the AG will contact the
landlord, providing him with the opportunity to reply. The
Attorney General's approach is to mediate a resolution by
informing the landlord of the obligations of the law and the AG's
authority to enforce the law. A landlord who has no damage claim
against a former tenant, and who is merely trying to keep the
deposit, will often respond to this pressure. For tenants in
occupancy, the AG will accept complaints of failure to segregate
rent security money in a separate, and if required, interest-
bearing bank account.


The laws affecting security deposits in New York State are not
protective enough. It is far too simple for landlords to abuse
them without penalty. Many landlords, once they collect a
security deposit, treat it as their own money, never to be
returned to the tenant unless they are forced to do so. The
"statutory trust" character of security deposits is thus flouted.

Reforms that would put some "teeth" into the law, such as triple
damages for unwarranted withholding of deposits, are needed.
Until reforms are enacted, the burden will continue to be on
tenants to demand that there be strict compliance with the
existing law.


These article are Copyright 1995 and 1996 by Community Training Resource
Center (CTRC) and reproduced by TenantNet. They may be freely
redistributed in their entirety provided they are reproduced exactly
as in the originals, including this copyright notice, the opening and
closing informational banners and any references to either CTRC
or TenantNet must be included.

These article are provided as is without any express or implied
warranty. While any information in these article is believed to be
correct at the time of writing, these articles are for educational
purposes only and do not purport to provide legal advice. If
you require legal advice, you should consult with a legal
practitioner licensed to practice in your jurisdiction.

Community Training Resource Center                (212)964-7200
47 Ann Street
New York, NY 10038

TenantNet - the online resource for residential tenants

TenantNet is not an apartment referral service or brokerage,
is not associated with any government agency, political party
or ideology. The information is believed to be accurate and is
for informational purposes only. TenantNet cannot act as
attorneys and makes no representations, expressed or implied,
that the information can or will be used or interpreted in any
particular way by any governmental agency or court.

External links are for convenience and informational purposes, and in some cases, might be sponsored
content. TenantNet does not necessarily endorse or approve of any content on any external site.

TenantNet Home | TenantNet Forum | New York Tenant Information
DHCR Information | DHCR Decisions | Housing Court Decisions | New York Rent Laws
Disclaimer | Privacy Policy | Contact Us

Subscribe to our Mailing List!
Your Email      Full Name