other things, the tenants' unpaid rent. The City Court awarded plaintiffs the sum of $1,270 for
checks defendants had improperly cashed after closing, but declined to award plaintiffs any
amount for the security deposits. Plaintiffs appeal from so much of the judgment as implicitly
[*2]dismissed their claim to recover the security deposits.
As a security deposit remains the property of the tenant (see General Obligations
Law § 7-103 [1]), Ruggiero improperly used the tenants' security deposits as setoffs against,
among other things, unpaid rents. Upon his sale of the building to plaintiffs, Ruggiero was
obligated, pursuant to General Obligations Law § 7-105 (1), to turn over the security
deposits to plaintiffs and to notify the tenants of such transaction. Pursuant to the case of
Gerel Corp. v Prime Eastside Holdings, LLC (12 AD3d 86, 92-93 [2004]), plaintiffs, as
successor landlords, were directly injured by Ruggiero's failure to turn over the security deposits
and have standing to recover the security deposits from the prior owner under General
Obligations Law § 7-105. Inasmuch as Ruggiero did not raise a valid defense to the
uncontroverted fact that he had failed to turn over the security deposits to plaintiffs in violation
of General Obligations Law § 7-105, plaintiffs were entitled to recover these deposits.
In view of the foregoing, substantial justice was not done between the parties according to
the rules and principles of substantive law (see UCCA 1804, 1807; Ross v
Friedman, 269 AD2d 584 [2000]; Williams v Roper, 269 AD2d 125, 126 [2000]).
Consequently, the judgment, insofar as appealed from, is reversed and the matter is remitted to
the City Court for a new trial at which the court shall determine the amount of the security