Security Deposits

The amount of a security deposit for a rent regulated apartment is usually limited by law to one month's rent. A rare exception is when a landlord was already holding two months' security deposit when the apartment first came under rent stabilization. In such a case, the landlord can continue to retain the two months' rent, and the subsequent tenant pays only one month of security.

When a lease is renewed at a higher rental amount, or the rent is increased during the term of the lease, the owner can collect additional money from the tenant to bring the security deposit up to the new monthly rent.

The security deposit must be kept in an interest-bearing account in a New York State bank. The owner must notify the tenant of the name and address of the bank and credit the tenant the full annual interest, less 1% of the security deposit per year for the owner's administrative costs. The tenant can choose whether the interest is to be subtracted from the rent, held in trust until the end of the tenancy, or paid in a lump sum at the end of each year.

If the tenant disagrees with the owner over the security deposit or interest, and if the problem is building-wide, the tenant may contact the Consumer Frauds and Protection Bureau of the New York State Attorney General's Office. Where the problem is not building-wide, the tenant may begin a proceeding in small claims court.