As someone who rents property in New York, you probably want to minimize your risks and expenditures by finding trustworthy, reliable tenants. Even those who seem dependable initially sometimes drop the ball, however.
Collecting a security deposit can protect you if a tenant causes damage to one of your rental properties. So, before you rent out your property, know the following about the state’s laws regarding security deposits.
How much you can request
In most cases, you can request however much you like from your tenant as a security deposit. There is one major exception. If you are renting out a rent-stabilized property, state laws prevent you from charging more than the amount of one month’s rent.
If the deposit must be refundable
New York does not allow you, as a landlord, to charge your tenant a nonrefundable security deposit. You must place the deposit you receive into a trust for the duration of your rental agreement, and under state law, the money still technically belongs to your tenant. Furthermore, you cannot store the money from the deposit with any of your personal money, and the full amount of the deposit must remain in a financial institution that falls within state lines.
What it takes for you to keep the deposit
For you to keep all or some of your tenant’s security deposit, your tenant must cause damage to the property that goes beyond what constitutes normal wear and tear. You may also be able to keep all or some of the security deposit amount if your tenant otherwise fails to comply with the terms of your lease.
When deposits must be returned
Though state laws do not dictate a specific length of time you must return your tenant’s security deposit after the lease is up, you must do so within a “reasonable” timeframe. For more information about what the law considers reasonable, research further or consult an attorney with real estate experience.