New York Security Deposit Laws | Deductions & Rights (2026 Guide)

Under GOL §7-108, most residential security deposits are capped at one month's rent. Landlords cannot charge extra "security" fees, require multiple deposits under different names, or increase the deposit when rent goes up.

There's one narrow exception worth knowing: owner-occupied buildings with fewer than three units are exempt from the statewide cap. Outside of that, the one-month limit applies to virtually all standard apartments, houses, and condos rented as a primary residence, including short-term and seasonal rentals, which follow the same cap and 14-day return rule with no special carve-out for beach houses, ski cabins, or weekend units.

The cap also can't be worked around through relabeling. "Move-in fees," "pet deposits," and "nonrefundable" charges are all treated as part of the same one-month limit; a landlord can't collect a separate deposit under a different name to get around the cap.

Rent-Stabilized vs. Market-Rate Units

This is a distinction many guides skip, but it matters: GOL §7-108 governs non-rent-stabilized units. If a unit is rent-stabilized or rent-controlled, GOL §7-107 applies instead, with its own set of rules that generally track the same one-month standard but differ in a few specifics. If you're unsure whether a unit is regulated, check that first before relying on the rules below.

Deposits are the tenant's money, not the landlord's. Under GOL §7-103, landlords must:

Hold deposits in trust, separate from personal or operating funds, is a violation.

Use a New York State bank.

Pay interest for buildings with 6 or more units. Deposits in these buildings must be held in an interest-bearing account; the landlord may retain 1% per year for administrative costs, with the remainder belonging to the tenant.

Disclose the bank name and address to the tenant in writing.

Failing to follow these rules, especially commingling funds can cost a landlord the right to keep any part of the deposit, regardless of actual damage.

What Landlords Can (and Can't) Deduct

Deductions are limited to specific, documented costs:

What landlords are allowed to deduct:

Unpaid rent

Damage beyond normal wear and tear (e.g., large holes, broken windows, major stains)

Unpaid utility charges owed directly to the landlord

Moving/storage costs, if the tenant abandons belongings

What landlords are not allowed to deduct:

Normal wear and tear (faded paint, minor scuffs, small nail holes, worn carpet from years of use)

Routine cleaning, if the unit is returned reasonably clean

Upgrades or replacements that improve the unit rather than repair damage

Pre-existing damage noted at move-in

The general test: the longer a tenancy, the more wear is expected. A carpet showing wear after seven years isn't damage; it's time. A cigarette burn or a fist-sized hole in drywall can be said to be damage.

This is the deadline that drives everything else in New York security deposit law.

Courts have held that this forfeiture penalty specifically attaches to a missed or absent itemized statement, meaning the paperwork, not just the money, is what protects a landlord's right to deduct anything at all. There's no partial credit for being close.

Tenants can request a written inspection at move-in to document the unit's condition at move-in. Any damage or defect noted in that written agreement can't later be deducted from the deposit; it's on the record as pre-existing.

Before moving out, tenants can also request a walkthrough inspection. By law, this must happen no earlier than two weeks and no later than one week before the tenancy ends, giving tenants a real window to fix issues before they become deductions. For landlords, offering this inspection and keeping the signed record is one of the strongest protections available if a deposit dispute ends up in court.

Documentation That Protects Both Sides

Most deposit disputes come down to who has better records. Keep:

Move-in and move-out inspection reports, signed by both parties where possible

Timestamped photos and video of the unit's condition at both points

Written communication: repair requests, notices, and responses via email or certified mail

Receipts for any repairs deducted from the deposit

A dated copy of the itemized statement, sent within the 14-day window

This is also where a simple deposit record template earns its keep: one document per unit, tracking the amount collected, where it's held, inspection dates, and any deductions with backup ready to hand over if a dispute ever reaches Small Claims Court. For landlords managing more than a handful of units, keeping this information consistent across properties matters as much as keeping it at all; a missing bank disclosure or an undated photo can undo an otherwise legitimate deduction.

Tenant Rights and Remedies

If a landlord withholds a deposit unfairly or misses the 14-day deadline, tenants can:

Send a written demand for return, citing GOL §7-108

File in Small Claims Court up to $10,000 in NYC Civil Court, or $5,000 outside NYC

Recover the full deposit, and in cases of willful violation, punitive damages up to twice the deposit amount

Disputes are handled through NYC Housing Court for New York City renters, or the local District or City Court elsewhere in the state. Tenants can also report violations to the New York State Attorney General's office, which publishes guidance and complaint resources for landlord-tenant issues.

Any lease clause where a tenant waives these rights is void, regardless of what's signed.

Cap the deposit at one month's rent

Hold it in trust, in a New York bank, separate from operating funds

Pay interest annually for buildings with 6+ units (minus a 1% admin fee)

Disclose the bank name and address in writing

Offer move-in and move-out inspections

Return the balance with an itemized statement if deducting within 14 days

Skipping any one of these, especially the 14-day paperwork requirement, puts the entire deposit at risk of forfeiture even when the underlying deductions were legitimate.

New York's security deposit rules are built around two numbers: one month's rent as the cap, and 14 days as the return deadline. Everything else trust accounts, itemized statements, inspection rights exists to make those two numbers enforceable. For landlords, the paperwork is the protection. For tenants, knowing the deadline is often the fastest path to getting a deposit back in full.

Also read: [New York Rent Control Laws](https://www.platuni.com/enterprise-resources/blog-and-insights/new-york-rent-control-laws)

Also Read: [Rental Property Template Excel](https://www.platuni.com/enterprise-resources/blog-and-insights/rental-property-template-excel)