The security deposit must be kept by the owner the end of the tenancy. In addition, before the
in an interest-bearing account in a New York State commencement of the tenancy and the signing of
bank. The owner must notify the tenant of the a lease, the tenant can request an inspection to
name and address of the bank and pay the tenant identify any issues that could lead to deductions
the full annual interest, less 1% of the security from the security deposit.
deposit per year for the owner’s administrative
costs. The tenant can choose whether the interest If the tenant disagrees with the owner over the
is to be subtracted from the rent, held in trust until return of the security deposit or payment of
the end of the tenancy, or paid in a lump sum at interest, the tenant may begin a proceeding in
the end of each year. small claims court or contact the Consumer Frauds
and Protection Bureau of the New York State
Effective November 15, 2025, changes to Section Attorney General’s Office.
7-107 of the General Obligations Law governing
security deposits extend certain protections to
rent stabilized tenants. In summary, owners must
return the tenant’s full security deposit within 14
days after they move out. Owners may keep only
the amount legally allowed for unpaid rent, utilities,
damages beyond normal wear and tear, and
moving and storage of the tenant’s belongings.
Owners who withhold any part of the security
deposit must provide the tenant with an itemized
list of damages and the cost of repairs. Tenants are
given the right to an inspection of the apartment
upon timely notification of the owner or tenant’s
intent to end the tenancy. After the inspection, the
owner shall provide the tenant with an itemized
statement of repairs that would be deducted from
the security