Overview
New York security deposit laws are governed by the General Obligations Law (GOL) Article 7, Sections 7-103 through 7-108. The 2019 Housing Stability and Tenant Protection Act significantly strengthened tenant protections, limiting deposits to one month's rent, requiring faster returns, and mandating pre-move-out inspections. New York is considered one of the most tenant-friendly states for security deposit laws. A security deposit management software solution ensures you meet these strict requirements.
Maximum Security Deposit
New York landlords may charge no more than one month's rent as a security deposit (GOL § 7-103). This applies to:
- Furnished and unfurnished units
- Market-rate and rent-regulated apartments
- All residential rentals statewide
Important: All security deposits must be refundable. Landlords cannot label fees as "non-refundable deposits," "move-in fees," or "cleaning fees" to circumvent this law (GOL § 7-107).
Return Timeline
Landlords must return the security deposit within 14 days after the tenant vacates (GOL § 7-108).
If any portion is withheld, the landlord must provide: (New Jersey similarly requires—see New Jersey security deposit laws.)
- An itemized statement explaining each deduction
- The actual cost of repairs or cleaning
- A check for any amount not retained
Critical: If the landlord fails to provide the itemized statement and remaining deposit within 14 days, they forfeit the right to retain any portion of the deposit.
Interest Requirements
Interest requirements depend on the size of the building (GOL § 7-103(2-a)):
Buildings with 6+ Units
Landlords must deposit security deposits in an interest-bearing account at a New York bank. The landlord may retain 1% annually for administrative expenses; the remaining interest belongs to the tenant.
Buildings with Fewer Than 6 Units
Interest is not required, but deposits must still be held in a separate account.
Account Requirements
- Must be held in a New York State banking institution
- Must be in a separate account used exclusively for tenant deposits
- Cannot be commingled with landlord's personal funds
Required Notices
Within 30 days of receiving the deposit, landlords must notify the tenant in writing of:
- The name and address of the bank holding the deposit
- The account number
Pre-Move-Out Inspection
Tenants have the right to request an inspection before moving out. If requested, the landlord must:
- Conduct the inspection with the tenant present
- Provide an itemized list of conditions that may result in deductions
- Give the tenant an opportunity to cure issues before final move-out
Property Transfers
When a rental property is sold, the security deposit must be transferred to the new owner within 5 days (GOL § 7-105). The previous landlord must notify the tenant by registered or certified mail of:
- The new owner's name and address
- The amount transferred
Penalties for Non-Compliance
New York's penalties focus on forfeiture and tenant remedies:
- Forfeiture: Missing the 14-day deadline means losing the right to retain any deposit
- Full refund: Failure to provide proper itemization requires return of the full deposit
- Court costs: Tenants may recover attorney's fees in successful claims
- Interest: Failure to pay required interest may result in additional liability
Common Compliance Questions
Does the 2019 HSTPA apply to my properties?
The Housing Stability and Tenant Protection Act applies to all residential rentals in New York, not just rent-regulated units. This means the one-month deposit limit, the 14-day return requirement, and interest rules apply to market-rate apartments, single-family homes, and small landlords alike. The only exceptions are certain owner-occupied buildings with limited units.
What counts as "reasonable" interest on deposits?
New York requires landlords to pay interest at a "prevailing rate" on deposits held for units in buildings with six or more units. The rate should reflect what a savings account would earn. You can deduct a 1% administrative fee annually. For buildings with fewer than six units, interest is not required but the other deposit rules still apply.
Can I require a larger deposit from tenants with poor credit?
No. Since 2019, you cannot collect more than one month's rent regardless of credit history, income level, or immigration status. You also cannot require a guarantor to pay more than one month's rent as a guarantee. Violating this rule exposes you to tenant lawsuits and potential penalties.
How detailed does my itemized statement need to be?
Very detailed. List each deduction separately with the specific damage, location, and cost. "Cleaning - $200" is insufficient. Instead: "Deep cleaning of kitchen—grease buildup on range hood and cabinets beyond normal use—$200." Include photos, invoices, or estimates to support each charge. Vague itemizations can be challenged in housing court. See how Passive works to generate compliant itemized statements.