Posted by Mark Smith on April 30, 1999 at 11:18:09:
In Reply to: Re: Am I liable for security deposit if landlord doesn't open escrow account? posted by Tara Catalino on April 30, 1999 at 09:30:03:
General Obligations Law §7-103 covers security
deposits for real property. Security deposits are
the property of the tenant, and the landlord is not
supposed to co-mingle the security deposit with
his/her own money. You may have a basis to sue for
the return of your security deposit if the landlord
spent it. Here is a link to the law, also clickable
below, from the Assembly's website:
And two corrections to Tara's post: (1) The landlord must place the security deposit in an interest-bearing account if there are six or more units in the building and (2) the landlord is entitled to keep 1% of the PRINCIPAL as an annual administrative fee; if the account pays only 2% annual interest, the landlord's 1% of the principal would be 50% (one-half) of the total interest.
: : I just entered into a lease and have agreed with
the landlord to pay the security deposit in three
installments. I found out my landlord already spent
my first installment and obviously did not set up a
bank account to hold my security deposit in escrow.
Am I liable to honor the next two installments? The
lease did not state what the landlord could do with
the security deposit, other than refunding it to me
at the end of the lease. The landlord spent the
first installment on something other than its
intended use, and is in effect getting a free loan
from me. Somone please advise.
: If your building has more than 6 apartments, then
your landlord is required by law to place your money
into an interest-bearing account. You are entitled to know the name of the bank and the account number, and if you make a request to the landlord, you are
entitled to annual interest payments. Your landlord
is allowed to deduct 1% of the interest for his/her
bookeeping expenses. If you have more than 6
apartments in your building, you may be in a position to take action.
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