.webp)
If you're new to the property ownership game in the New York Capital region, the first thing you need to brush up on is state rental laws and how they affect both you and your tenants. When you're looking for the perfect tenant, understanding both their and your legal rights and obligations can make the entire process just a little smoother.
If you have no legal background and you're a first-time landlord, understanding NY security deposit law might seem totally overwhelming. This is where this blog comes in - to break down the important parts for you.
Read on to learn more.
What Comprises a Security Deposit in NY State?
As a landlord, it's vital that you clearly understand what you can legally request as a security deposit. In the state of New York, as per the Housing Stability and Tenant Protection Act of 2019, a security deposit equates to one month's rent.
It's important to note that whether a property is rent-controlled or not, it's illegal for a landlord to request a higher security deposit.
The same act mentioned above also means you cannot request that tenants pre-pay rent. In short, you can only request a maximum of two month's rent upfront - the security deposit and the first month's rent. As a landlord, you're also prohibited from requesting a security deposit for pets.
Bear in mind that NY security deposit laws do not apply to seasonal rentals (stays shorter than 120 days). You can, however, collect the entire rent for this period upfront, if you choose.
Security Deposit Return Policy
How long do you have to return a security deposit to your tenants? In the state of New York, this period is 14 days from the end of the lease date.
If the property needs repair once a tenant moves out, it's your legal obligation to lodge a detailed report of the issues and how much it will cost to repair them. The tenant can decide whether they want to fix the issues themselves or have the necessary funds deducted from the deposit.
Bear in mind that if you fail to lodge a detailed report, you have no claim over the security deposit. You must return it in full.
Interest on Security Deposits
In line with NY state law, tenant security deposits can earn interest. You are legally obligated to return an amount that exceeds one percent of the deposit to the tenant. Anything below or equal to one percent, you can keep.
It's important to note that interest on security deposits only applies if you own a property in a privately owned building with fewer than six units.
You must place the deposit in a safe and reliable New York bank where your tenant can earn competitive interest.
Security Deposits and Rental Increases
As a landlord, you might see the need to increase your rental price after some time. Does this mean that the security deposit increases? In short, yes.
Whether you choose to increase the rent during the tenancy or upon renewal of the lease, you can collect the additional amount from your tenant to match your new monthly rent.
Need Help Understanding NY Security Deposit Law?
Getting to grips with the ins and outs of NY security deposit law needs to be on your radar as a landlord and property owner. If you're feeling confused or overwhelmed by your legal obligations as a landlord, this is where Veno Properties is here to help.
We offer the full package in terms of property management services. Whether you need help managing your legal obligations, resident and tenant screening, leasing, accounting, or marketing - we do it all.
We are your go-to in the New York Capital region. Learn more about how we can help you make the most of your property ownership.
