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What are important points about security deposits?

A common issue that might be confusing to New Yorkers who are seeking to find a rental property is how the security deposit falls into landlord/tenant law. As part of a rental agreement, it is just automatically accepted that there must be a deposit placed on the property. However, a number of people are blissfully unaware of what it actually does for them and how it can be abused by a property owner. When there is a disagreement or confusion about the deposit, knowing various facts can help a renter.

In New York, there is no limit to what the security deposit can be. For rent stabilized apartments, the law is different. The maximum that a landlord can charge in that situation is one month's rent. An exception is if the landlord collected up to two months' rent prior to the rent being stabilized. The landlord is not allowed to charge a nonrefundable deposit. The deposit is the property of the tenant and will remain so in New York. It must be placed in a trust that will last for the duration of the lease or agreement.

With a deposit, it must be kept in a bank within New York. It cannot be mixed with other moneys, such as personal assets of the landlord, and the landlord is not allowed to use it for their own desires or purposes. The landlord is required to provide written notice after the security deposit has been received. The notice must include the bank in which the deposit is kept, the address of the bank, and the amount that was deposited. Landlords are allowed to keep the deposit for damages that go beyond normal wear and tear or to pay for rent that was not paid. It is possible for the landlord to withhold the deposit for other issues that breached the lease agreement.

Landlords are not required to have a walk-through before the tenant leaves the property. The landlord must return the security deposit when the rental agreement ends and the tenant leaves or within a reasonable time after that. If the property is sold, the landlord must transfer the security deposits to the new owner and inform the tenants of the ownership change. With a rental agreement and a security deposit, there is always a chance for landlord-tenant disputes to arise. If this is the case or if any legal help is needed, it is wise to call an experienced lawyer to get advice.

Source: The Balance, "8 Basics of New York's Security Deposit Law," Erin Eberlin, Oct. 16, 2016

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