Security Deposit Law
What New York landlords must do with security deposits — the cap, interest, return deadline, account rules, and penalties — with citations to the statute itself.
Verified as of June 10, 2026
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Deposit cap
One month's rent — no exceptions for pets or furnished units.
Interest
Required for buildings with six or more units: an interest-bearing NY bank account at the prevailing rate; the landlord may keep a 1% admin fee.
Return deadline
Return the deposit with an itemized statement within 14 days after the tenant vacates.
No deposit or advance may exceed one month's rent for nearly all residential dwelling units; the statute carves out only seasonal-use dwelling units and certain owner-occupied cooperative situations. Separate pet deposits or 'last month's rent' on top of a full deposit push you over the cap.
If the property has six or more family dwelling units, the deposit must sit in an interest-bearing account at a New York banking organization earning the prevailing rate for such deposits in the area. The landlord may retain a sum equal to 1% per annum of the deposit for administrative expenses; the rest of the interest belongs to the tenant (paid annually, applied to rent, or held to the end of the tenancy). Buildings under six units have no state interest mandate, but voluntary deposits-in-bank still trigger the notice rules.
Within fourteen days after the tenant vacates, the landlord must provide an itemized statement of any deductions and return the balance. Miss the deadline and the landlord forfeits any right to retain any portion of the deposit — even for legitimate damage.
The deposit remains the tenant's money and must be held in trust, never commingled with the landlord's personal funds. For buildings with six or more units it must be deposited in a New York banking organization (in an interest-bearing account), and the landlord must notify the tenant in writing of the bank's name and address and the amount deposited. Any lease clause waiving these protections is absolutely void.
Failure to provide the itemized statement and refund within fourteen days forfeits any right to retain any portion of the deposit. A landlord found to have willfully violated the deposit rules is also subject to punitive damages of up to twice the amount of the deposit.
NYC and rent-regulated caveats: rent-stabilized units are governed by GOL § 7-107 and DHCR rules rather than § 7-108's general scheme, and rent-controlled tenancies have their own treatment. NYC's high share of 6+ unit buildings means the § 7-103 interest-bearing-account and bank-notice rules apply to most NYC landlords in practice.
Total deposits and advances cannot exceed one month's rent (outside seasonal-use units and certain owner-occupied co-op situations). That means no pet deposit, key deposit, or prepaid last month on top of a full one-month security deposit.
Deposits remain the property of the tenant and must be held in trust without commingling with the landlord's personal funds; any waiver of this in the lease is void.
Deposits for buildings with six or more family dwelling units must go into an interest-bearing account at a New York banking organization at the prevailing local rate. The landlord must give the tenant written notice of the bank's name and address and the amount held, and may keep 1% per annum as an administrative fee.
Before move-in, the landlord must offer the tenant the chance to inspect and sign a written agreement documenting existing conditions. Before move-out, the landlord must notify the tenant of the right to request an inspection held no earlier than two weeks and no later than one week before the tenancy ends, with 48 hours' written notice, so the tenant can cure deficiencies.
The entire deposit is refundable except for itemized, lawful deductions: unpaid rent, damage beyond normal wear and tear, unpaid utilities, and moving/storage of the tenant's belongings. Ordinary wear and tear and damage from prior tenants can never be retained.
Deposits and advances together cannot exceed one month's rent; the extra month is an unlawful overcharge the tenant can recover.
You forfeit the right to retain any portion of the deposit — even for real damage — and a willful violation exposes you to punitive damages up to twice the deposit.
Commingling violates the trust requirement of § 7-103(1); the money legally remains the tenant's, and (for 6+ unit buildings) it must be in a New York interest-bearing bank account with written notice to the tenant.
The statute bars retaining any amount for ordinary wear or damage caused by a prior tenant; doing so risks the willful-violation punitive damages of up to twice the deposit.
Without the documented move-in condition and the offered end-of-tenancy inspection (with 48 hours' written notice, held one to two weeks before move-out), deductions are far harder to defend and the procedural lapse counts against you under the deposit rules.
One month's rent, total. Since the 2019 HSTPA, no deposit or advance may exceed one month's rent for most residential units (seasonal-use units are the main exception), so you cannot stack a pet deposit or prepaid last month on top (GOL § 7-108(1-a)(a)).
14 days after the tenant vacates. You must send an itemized statement of any deductions and refund the balance within that window — if you miss it, you forfeit the right to keep any of the deposit (GOL § 7-108(1-a)(e)).
Yes, if the building has six or more units: the deposit must be in an interest-bearing account at a New York bank earning the prevailing rate, you must tell the tenant the bank's name and address in writing, and you may keep 1% per annum as an administrative fee — the rest of the interest is the tenant's (GOL § 7-103(2), (2-a)). Smaller buildings have no state interest mandate.
No. You may deduct only for unpaid rent, damage beyond normal wear and tear, unpaid utility charges, and moving/storage of the tenant's belongings. Ordinary wear and tear — and anything a previous tenant caused — must be returned (GOL § 7-108(1-a)(b)).
Missing the 14-day itemization deadline forfeits your right to retain any portion of the deposit, and a willful violation of the deposit rules can add punitive damages of up to twice the deposit (GOL § 7-108(1-a)(e), (g)).
The deposit always remains the tenant's money and must be held in trust, never commingled with your personal funds (GOL § 7-103(1)). For buildings of six or more units it must be deposited in an interest-bearing account at a New York banking organization with written notice to the tenant (GOL § 7-103(2-a)).
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Statute facts on this page were verified against the cited official sources on June 10, 2026.
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