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Are Two-Month Security Deposits Allowed for Renewals?

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Are Two-Month Security Deposits Allowed for Renewals?

Postby BeyondTheWall » Wed May 20, 2020 2:18 pm

I understand that new regulations prohibit landlords from requesting more than one month's rent for a security deposit. I also believe this does not apply to leases signed before the law was passed.

My landlord has two months security deposit. I just signed a renewal, and they kept my two-month deposit. Does anyone know if they are allowed to do that? Or does the renewal count as a new contract, under which they can only keep one months rent?

I have looked at the statute and do not believe this is addressed. Thank you.
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Re: Are Two-Month Security Deposits Allowed for Renewals?

Postby TenantNet » Wed May 20, 2020 2:23 pm

Are you rent stabilized? Have you checked (not with the landlord, but looked at it with a DHCR rent history?)
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Re: Are Two-Month Security Deposits Allowed for Renewals?

Postby BeyondTheWall » Wed May 20, 2020 2:29 pm

I am not rent-stabilized. I have not requested the rent history from DHCR - do you think that would help answer the security deposit issue? I do not have issues with a rent increase, but any info could be helpful.
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Re: Are Two-Month Security Deposits Allowed for Renewals?

Postby TenantNet » Wed May 20, 2020 2:33 pm

According to the Lebovits monograph (page 44), limits on security deposits and pre-paid rent, is covered by NYS General Obligations Law section 7-108 (1-a). See the text at https://www.nysenate.gov/legislation/laws/GOB/7-108.

I believe your question is answered by paragraph 1-a(a) below.

Deposits made by tenants of non-rent stabilized dwelling units. 1. This section shall apply to all dwelling units in residential premises, unless such dwelling unit is specifically referred to in section 7-107 of this title.

1-a. Except in dwelling units subject to the city rent and rehabilitation law or the emergency housing rent control law, continuing care retirement communities licensed pursuant to article forty-six or forty-six-A of the public health law, assisted living providers licensed pursuant to article forty-six-B of the public health law, adult care facilities licensed pursuant to article seven of the social services law, senior residential communities that have submitted an offering plan to the attorney general, or not-for-profit independent retirement communities that offer personal emergency response, housekeeping, transportation and meals to their residents:

(a) No deposit or advance shall exceed the amount of one month's rent under such contract.

(b) The entire amount of the deposit or advance shall be refundable to the tenant upon the tenant's vacating of the premises except for an amount lawfully retained for the reasonable and itemized costs due to non-payment of rent, damage caused by the tenant beyond normal wear and tear, non-payment of utility charges payable directly to the landlord under the terms of the lease or tenancy, and moving and storage of the tenant's belongings. The landlord may not retain any amount of the deposit for costs relating to ordinary wear and tear of occupancy or damage caused by a prior tenant.

(c) After initial lease signing but before the tenant begins occupancy, the landlord shall offer the tenant the opportunity to inspect the premises with the landlord or the landlord's agent to determine the condition of the property. If the tenant requests such inspection, the parties shall execute a written agreement before the tenant begins occupancy of the unit attesting to the condition of the property and specifically noting any existing defects or damages. Upon the tenant's vacating of the premises, the landlord may not retain any amount of the deposit or advance due to any condition, defect, or damage noted in such agreement. The agreement shall be admissible as evidence of the condition of the premises at the beginning of occupancy only in proceedings related to the return or amount of the security deposit.

(d) Within a reasonable time after notification of either party's intention to terminate the tenancy, unless the tenant terminates the tenancy with less than two weeks' notice, the landlord shall notify the tenant in writing of the tenant's right to request an inspection before vacating the premises and of the tenant's right to be present at the inspection. If the tenant requests such an inspection, the inspection shall be made no earlier than two weeks and no later than one week before the end of the tenancy. The landlord shall provide at least forty-eight hours written notice of the date and time of the inspection. After the inspection, the landlord shall provide the tenant with an itemized statement specifying repairs or cleaning that are proposed to be the basis of any deductions from the tenant's deposit. The tenant shall have the opportunity to cure any such condition before the end of the tenancy. Any statement produced pursuant to this paragraph shall only be admissible in proceedings related to the return or amount of the security deposit.

(e) Within fourteen days after the tenant has vacated the premises, the landlord shall provide the tenant with an itemized statement indicating the basis for the amount of the deposit retained, if any, and shall return any remaining portion of the deposit to the tenant. If a landlord fails to provide the tenant with the statement and deposit within fourteen days, the landlord shall forfeit any right to retain any portion of the deposit.

(f) In any action or proceeding disputing the amount of any amount of the deposit retained, the landlord shall bear the burden of proof as to the reasonableness of the amount retained.

(g) Any person who violates the provisions of this subdivision shall be liable for actual damages, provided a person found to have willfully violated this subdivision shall be liable for punitive damages of up to twice the amount of the deposit or advance.

2. (a) In circumstances where any sum of money or any other thing of value deposited as security for the full performance by a tenant of the terms of his lease is not turned over to a successor in interest pursuant to section 7-105 of this chapter, the grantee or assignee of the leased premises shall also be liable to such tenant, upon conveyance of such leased premises, for the repayment of any such security deposit, plus accrued interest, as to which such grantee or assignee has actual knowledge.

(b) For purposes of this section, a grantee or assignee of the leased premises shall be deemed to have actual knowledge of any security deposit which is (i) deposited at any time during the six months immediately prior to closing or other transfer of title in any banking organization pursuant to subdivision two-a of section 7-103 of this chapter, or (ii) acknowledged in any lease in effect at the time of closing or other transfer of title, or (iii) supported by documentary evidence provided by the tenant or lessee as set forth in paragraph (c) of this subdivision.

(c) With respect to any leased premises for which there is no record of security deposit pursuant to subparagraph (i) or (ii) of paragraph (b) of this subdivision, the grantee or assignee of the leased premises shall be obligated to notify the tenant thereof in writing no later than thirty days following the closing or other transfer of title to the fact that there is no record of a security deposit for said leased premises and that unless the tenant within thirty days after receiving notice provides him or it with documentary evidence of deposit, the tenant shall have no further recourse against him or it for said security deposit. For purposes of this subdivision, "documentary evidence" shall be limited to any cancelled check drawn to the order of, a receipt from, or a lease signed by any predecessor in interest, if such predecessor's interest in the leased premises existed on or after the effective date of this section. Except as otherwise provided by subparagraphs (i) and (ii) of paragraph (b) of this subdivision the grantee or assignee of the leased premises shall not be charged with actual knowledge of the security deposit where the tenant fails within the thirty-day period to provide said documentary evidence. Where the grantee or assignee of the leased premises fails to notify the tenant as specified in this paragraph within thirty days following the closing or other transfer of title, the tenant shall be entitled to produce documentary evidence at any time.

(d) The grantee or assignee of the leased premises shall have the right to demand that the grantor or assignor thereof establish an escrow account equal to one month's rent for any leased premises for which there is no record of a security deposit pursuant to paragraph (b) of this subdivision to be used for the purpose of holding harmless the grantee or assignee in any case where, at a date subsequent to the closing or other transfer of title, the tenant gives notice pursuant to paragraph (c) of this subdivision.

(e) The liability of a receiver for payment of any security deposit plus accrued interest pursuant to this subdivision shall be limited to the amount of such deposit actually turned over to him or it pursuant to subdivision one of section 7-105 of this chapter and to the operating income in excess of expenses generated during his or its period of receivership.

3. Any agreement by a lessee or tenant of a dwelling waiving or modifying his rights as set forth in this section shall be absolutely void.
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Re: Are Two-Month Security Deposits Allowed for Renewals?

Postby TenantNet » Wed May 20, 2020 2:35 pm

We ask about RS status because, frankly, most tenants just buy what the LL tells them, and a HUGE amount of time, the LL is lying, just like Trump. It may not matter in regards to your deposit, but worth looking into (quietly) no matter what.
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Re: Are Two-Month Security Deposits Allowed for Renewals?

Postby BeyondTheWall » Wed May 20, 2020 4:43 pm

Thank you very much for this, TenantNet. I believe this makes it clear that for new leases, landlords cannot require more than one month's rent. My landlord has two months of my rent from a 2016 lease, and I am still unsure whether they need to return those funds based on my renewal. I will keep looking to see if there is guidance for that issue and ask my landlord what their view is.

Thank you
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Re: Are Two-Month Security Deposits Allowed for Renewals?

Postby TenantNet » Wed May 20, 2020 5:20 pm

The operative language, in our opinion, is "No deposit or advance shall exceed the amount of one month's rent under such contract."

This does not distinguish between new or current leases. In our view, if prior to June 2019, the LL had two months of deposit, then he must refund one of those months PLUS all accrued interest. The same goes for first and last month's rent. He can't have two months' rent. Rent accrues monthly (usually on the first of each month). Barring other issues, the LL is entitled to rent monthly. He can have no other/additional months of rent.

So he should refund whatever rent or deposit he has in addition to the one month's deposit. If you paid May 2020 rent, then no more money is due until June.

Do your research before talking to the LL. See DHCR updated fact sheets at https://hcr.ny.gov/rent-laws-updates

and see https://hcr.ny.gov/system/files/documen ... eet-09.pdf

There are various ways to get the money back, including DHCR complaints or court complaints. In our view, that's overkill. You can also just let the extra money take care of rent for the next month. The LL might complain and he might even sue (when the courts reopen). But if your calculations are correct, you should win.
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