N.Y. Comp. Codes R. & Regs. Tit. 9 § 2205.5 - Security deposits
Regardless of any contract, agreement, lease or other
obligation heretofore or hereafter entered into, no person shall demand,
receive or retain a security deposit for or in connection with the use and
occupancy of housing accommodations, except:
(a) if the demand, collection or retention of
such security deposit was permitted under the rent regulations promulgated
pursuant to the Federal Act, the State Rent Law or the local laws of the City
of New York, and said security deposit does not exceed the rent for one month
in addition to the authorized collection or rent; or
(b) if the demand, collection or retention of
such security deposit was pursuant to a rental agreement with the tenant, and
said security deposit does not exceed the rent for one month (or for one week
where the rental payment period is for a term of less than one month) in
addition to the authorized collection of rent, provided in all cases:
(1) that said security deposit shall be
deposited in a banking organization no later than July 15, 1960, or within 15
days after receipt thereof, whichever is later, which shall be placed in an
interest-bearing account on or before October 1, 1974 or the date of any
deposit made thereafter;
(2) the
person depositing such security money shall be entitled to receive, as
reimbursement for administrative expenses, a sum equivalent to one percent per
annum upon the security money so deposited;
(3) the balance of the interest paid by the
banking organization shall be held in trust until applied for the rental of the
housing accommodations, or until paid to the tenant not less often than
annually by check or cash;