New York Security Deposit Laws for Landlords

For most New York apartments, a landlord can collect no more than one month's rent as a security deposit, and that limit includes any advance rent such as last month's rent. You must hold the money in trust, return it within 14 days after the tenant moves out, and send an itemized statement for anything you keep. Miss the 14-day deadline and you lose the right to keep any of it. General Obligations Law (GOL) section 7-108 sets these rules for most rentals, and GOL section 7-107 applies them to rent-stabilized apartments on leases and renewals signed on or after November 15, 2025.

What you can collect when the lease is signed

The cap is one month's rent for any deposit or advance combined. On a $2,800 apartment, you can collect the first month's rent plus a single $2,800 payment, whether you call it a security deposit or last month's rent, but not both. The Attorney General's tenant guide states this directly: a landlord cannot ask for both last month's rent and a security deposit.

Two related limits affect the same move-in payment:

• No extra money from a guarantor. New York State Homes and Community Renewal (HCR), the agency that runs rent stabilization, says the one-month limit also bars asking a guarantor or other third party for more.
• Almost no fees. Real Property Law section 238-a bars fees at or before the start of a tenancy except a background and credit check fee. That fee is capped at $20 or your actual cost, whichever is less. You must waive it if the applicant gives you a check done in the past 30 days, and you can collect it only after giving the applicant a copy of the report and the screening company's receipt or invoice.

In New York City, HCR notes that the FARE Act, in effect since June 11, 2025, bars a broker who represents you from charging the tenant a broker fee. New York lease required disclosures covers what else a New York lease must disclose.

When the rent goes up, you can top up the deposit. HCR and the Attorney General both say that on a renewal at a higher rent, or a rent increase during the lease, you may collect enough to bring the deposit up to the new monthly rent. On a renewal from $2,800 to $2,950, that is an extra $150.

Which apartments follow which rules

The rent-stabilized change came from Chapter 436 of the Laws of 2025, signed October 16, 2025, which applies to leases and renewals entered into on or after its effective date 30 days later. Licensed senior communities such as assisted living residences are also outside GOL 7-108's deposit rules. A seasonal rental can exceed the cap only if the unit is registered with the local government, is rented no more than 120 days per calendar year, and the lease states those limits and the tenant's primary home address. New York rent stabilization for landlords explains how stabilized leases and renewals work.

How you must hold the deposit

The deposit stays the tenant's money. Under GOL section 7-103, you hold it in trust and cannot mix it with your own funds, whatever the size of the building. A lease clause that waives these rules is void.

What else you must do depends on building size and whether the apartment is rent-stabilized or rent-controlled:

• Six or more units: put the deposit in an interest-bearing account at a bank with a place of business in New York, paying the prevailing rate for similar deposits in your area.
• Fewer than six units: an interest-bearing account is required for rent-stabilized and rent-controlled apartments and optional for unregulated apartments. If you choose one for an unregulated apartment, the same interest rules apply.
• Any building: if you deposit the money in a bank, tell each tenant in writing the bank's name and address and the amount deposited.

You may keep 1% of the deposit per year as an administrative fee, and that fee replaces any other charge for holding the money. The rest of the interest belongs to the tenant, who chooses whether you pay it each year, apply it to rent, or hold it until the deposit is returned.

Example: a $3,000 deposit sits in an account paying 2.5% a year and earns $75. Your 1% fee is $30, so you owe the tenant $45 for that year. If the account pays 1% or less, the fee absorbs all of the interest.

The move-in and move-out inspections

The law requires you to offer the tenant two inspections, one before move-in and one shortly before move-out.

1. Offer a move-in inspection. After the lease is signed and before the tenant moves in, offer to inspect the unit together. If the tenant accepts, you both sign a written agreement describing the unit's condition. You cannot later deduct for any condition, defect, or damage listed in it, so record pre-existing wear accurately. Is a move-in inspection required? covers how to document condition.
2. Send the pre-move-out notice. Within a reasonable time after either side gives notice to end the tenancy, tell the tenant in writing that they may request an inspection and be present for it. This duty does not apply if the tenant gives less than two weeks' notice.
3. Schedule it in the window. If the tenant asks, hold the inspection no earlier than two weeks and no later than one week before the tenancy ends, with at least 48 hours' written notice of the date and time.
4. List what you plan to deduct. After the inspection, give the tenant an itemized statement of the repairs or cleaning you would charge for. The tenant may fix those items before moving out.

What you can deduct and the 14-day deadline

You may keep only the reasonable, itemized cost of:

• unpaid rent;
• damage beyond ordinary wear and tear;
• utility charges the tenant owes you directly under the lease; and
• moving and storing belongings the tenant left behind.

You cannot charge for ordinary wear and tear. Within 14 days after the tenant vacates, send the itemized statement and return the balance. Ask for a forwarding address in writing at move-out so you have somewhere to send them. What security deposits are usually used for explains which charges a deposit can cover and what counts as ordinary wear and tear.

If you miss the 14 days, you forfeit the right to keep any part of the deposit, even for real damage. In court, you carry the burden of proving that what you kept was reasonable, so keep dated photos, invoices, and the inspection records.

A landlord who violates these rules owes the tenant's actual damages. For a willful violation, a court can add punitive damages of up to twice the deposit. On a $3,000 deposit kept on purpose without a lawful basis, that means returning the $3,000 plus up to $6,000 more. If the tenant owes more than the deposit covers, the balance is a separate claim; New York eviction process for landlords covers the court process when rent goes unpaid during the tenancy.

When you sell or buy a building with tenants

If you sell, state law requires you to turn each deposit, with the tenant's interest, over to the buyer at the deed delivery or within five days after, or return it to the tenant. You must tell each tenant by registered or certified mail that you did so and give the buyer's name and address. Once you transfer the money properly, the buyer becomes responsible for returning it. Failing to do this is a misdemeanor.

If you buy, you can be liable for deposits the seller never handed over when you had actual knowledge of them. The law presumes you knew when a lease in effect at closing acknowledges the deposit, or when the deposit was held in a bank in the six months before closing. If you have no record of a tenant's deposit, notify the tenant in writing within 30 days after closing. The notice must say you have no record and that the tenant loses any claim against you for the deposit unless they send proof within 30 days, meaning a cancelled check, a receipt, or a lease signed by the prior owner. If you skip the notice or send it late, the tenant can produce that proof at any time. For a rent-stabilized apartment still on a lease signed before November 15, 2025 and not renewed since, the Attorney General says the buyer is responsible for the deposit and interest whether or not the seller handed them over. For a unit with no deposit record, you can also demand that the seller set up an escrow of one month's rent to cover a deposit the tenant proves later. Buying a currently occupied rental covers what to learn about the tenants and leases before closing.