NYC Security Deposits: Legal Limits, Interest, Return Deadlines, and the Housing Stability Act
7 min read · Updated 2025-01-15
NYC security deposit rules under the Housing Stability and Tenant Protection Act of 2019: one month limit, interest requirements, 14-day return deadline, and itemized deduction requirements.
Security Deposit Rules Under HSTPA
What are the security deposit limits in NYC under HSTPA 2019?
The Housing Stability and Tenant Protection Act of 2019 (HSTPA) capped security deposits at one month's rent for all residential tenancies in New York State, regardless of whether the unit is stabilized or free-market. Before HSTPA, landlords could collect up to two months' rent for free-market apartments. This limit applies to new leases and renewals after June 14, 2019. Landlords holding deposits larger than one month's rent for leases predating HSTPA had to return the excess at lease renewal.
Must security deposits earn interest in NYC?
For rent-stabilized apartments, security deposits must be held in interest-bearing accounts, and 1% of the interest must be paid annually to the tenant. For free-market apartments in buildings with six or more units, deposits must also be held in interest-bearing accounts. The interest rate is low (commercial savings account rates), but the requirement is real. Deposits must be held in New York State institutions and cannot be commingled with the landlord's personal funds.
What is the deadline to return a security deposit after a tenant vacates?
Under HSTPA, landlords must return the security deposit (or provide an itemized statement of deductions) within 14 days of the tenant vacating and surrendering the keys. The 14-day period begins when the tenant fully vacates — not from the lease end date if the tenant left early. Failure to return or account for the deposit within 14 days forfeits the landlord's right to make any deductions, and the tenant may be entitled to a penalty.
What deductions can landlords make from a security deposit?
Legitimate deductions include unpaid rent, non-routine cleaning costs (beyond ordinary cleaning), and damage beyond normal wear and tear. Normal wear and tear — nail holes in walls, minor carpet wear, small scuffs — cannot be charged to the tenant. Repainting the entire apartment solely because the tenant lived there for several years is typically not deductible. Document the apartment's condition before move-in (photos, video, checklist) and after move-out to support any deductions.
What is the required documentation when making deductions?
Within the 14-day window, you must provide the tenant with: (1) A detailed itemized statement listing each deduction with the dollar amount; (2) Copies of receipts or invoices for any repair or cleaning costs. Vague statements like "cleaning - $500" without invoices can be challenged. If the repair hasn't been completed when you send the statement (e.g., a contractor estimate), note that and send the invoice when received within a reasonable time.
What happens if I fail to return the deposit within 14 days?
Failure to return the deposit or provide an itemized statement within 14 days results in the landlord forfeiting all claims to the deposit — even if legitimate deductions exist. The tenant can pursue recovery in small claims court (for amounts up to $10,000). Under HSTPA, landlords who wrongfully withhold deposits may face additional statutory damages. New York courts have become increasingly tenant-favorable on security deposit disputes since HSTPA.
Can the last month's rent be applied to the security deposit?
Under HSTPA, a landlord cannot require a "last month's rent" deposit (collecting two months to cover the last month of tenancy). The security deposit must be exactly one month's rent and cannot be specified for use as last month's rent. If a tenant's rent increases over time, the deposit does not automatically increase — it remains at the original one month's rent amount. Landlords can request a rent increase for the security deposit proportional to a rent increase only if the original deposit was less than one month's rent.
How should I document the condition of an apartment to protect the security deposit?
Best practice: conduct a written move-in inspection with the tenant present, documenting existing conditions room by room. Take timestamped photos and video. Have the tenant sign the inspection report. Repeat the process at move-out. This documentation is your primary defense against a tenant's claim that deductions are improper. Courts expect landlords to have this documentation — without it, a claim for deductions is difficult to prove.