Most landlords in Westchester County, NY require a security deposit from their tenants. This is due to the fact that a security deposit helps protect them from any careless or negligent property damage caused by their tenants.

Aside from this, a security deposit also helps:

  • Cover unpaid utilities. Examples of utilities include high-speed internet, cable connection for TV, trash removal, electricity, water, heat, and gas. Most of these will fall under the tenant’s name. A tenant should ensure that they have cleared the bills when they move out. If they don’t, the landlord can deduct the appropriate amount from their deposit.
  • Cover excessive cleaning costs. Generally speaking, many landlords require that their tenants return the property in the same condition they found it less normal wear and tear. Unfortunately, some tenants leave their units in a bad state.
  • Cover lost rental income. Landlords can also use the tenant’s security deposit to cover for lost rental income. This is often the case when a tenant abandons the property or breaks their lease early.
  • Cover loss in rent payments. Failure to pay rent is a serious violation of the lease. Unfortunately, it is arguably among the most common issues New York landlords face. In such cases, the state law permits landlords to deduct the appropriate amounts from the renter’s security deposit.

Whether you are a landlord, a tenant, or just interested to learn more about the security deposit laws in New York, this post is for you.


Guide to the New York Security Deposit Laws

Keeping a Tenant’s Security Deposit

In New York, landlords are allowed to keep all or a part of the tenant’s security deposit to cover negligent or careless property damage. Examples of such damage include:

  • Pet stains, burns, or holes in the carpet
  • Broken doors or disabled locks
  • Unapproved paint on the walls


  • Excessive dirtiness in the bathroom or kitchen
  • Broken appliances due to misuse

If a tenant causes any of the aforementioned damages, the landlord is permitted to deduct the cost of repair from their security deposit.

That said, landlords cannot charge their tenants for damage resulting from normal wear and tear. Simply put, normal wear and tear is the expected decline in a property’s condition due to everyday use.

Examples of normal wear and tear include:

  • Normal dirt and wear in carpets
  • Broken light bulbs
  • Small pinholes in the wall
  • Loose door handles
  • A couple of scrapes or dings in a wood floor
  • A couple of small stains on a carpet


NY Security Deposit Limit

In New York, you can charge your tenant a maximum of one month’s rent as a security deposit.


Written Notice

New York laws require that a landlord notify their tenant in writing after receiving their security deposit. The notice must be written and include three important aspects:

  • Total money deposited;
  • The name of the banking institution;
  • The address of the banking institution.


Non-Refundable Deposits

In the state of New York, deposits are considered the property of the tenant. As such, any nonrefundable deposit is considered illegal.

Landlords are only responsible for storing the deposit in a trust account for the entire term of the lease agreement.


Security Deposit Storage

New York security deposit laws require landlords to store a tenant’s deposit at a financial institution. This law also requires them to abide by two things. One, not to use the money for their own purposes. Two, not to combine the tenant’s security deposit with their own money.

Furthermore, for landlords having more than five units, they must place the deposit in an interest-earning account. The rate of interest must be equal to the interest rate for similar deposits in the area.

Landlords having five or fewer units aren’t required to place their tenant’s deposit in an interest-earning account.

For an interest-earning deposit, the landlord is permitted to collect a yearly fee that is equal to 1% of the tenant’s security deposit. The rest of the annual interest (99%) will belong to the tenant.

The landlord has three options when it comes to the interest accrued:

  • Hold it for their tenant in trust until the lease comes to an end.
  • Put it toward the tenant’s rent.
  • Pay it directly to the tenant.


Security Deposit Return NY

In New York, you must return the security deposit to the tenant within 14 days of the termination or end of the lease.


Transfer of Property Ownership

In case the ownership of the property changes during a tenancy, landlords have two options. One, they transfer all the tenant’s security deposit to the incoming owner. Or two, they notify the tenant of the change in ownership in writing. Additionally, the notice must be sent via registered or certified mail.

In the notice, the landlord must ensure they provide the tenant with the contact details of the new landlord.


The Bottom Line – New York Security Deposit Laws

There you have it. An overview of the security deposit laws in the state of New York. If you have more questions, please seek professional legal services from a licensed attorney. Alternatively, you can contact a professional property management company.

Disclaimer: This article is purely informational. It should not be used as a substitute for legal advice from a licensed attorney.