N.Y. General Obligations Law § 7-107: Deposits made by tenants of rent stabilized dwelling units

§ 7-107. Deposits made by tenants of rent stabilized dwelling units.

1. This section shall apply only to dwelling units subject to the New

York city rent stabilization law of nineteen hundred sixty-nine or the

emergency tenant protection act of nineteen seventy-four.

2. No deposit or advance shall exceed the amount of one month's rent,

under any contract for the lease or tenancy of a dwelling unit subject

to this section.

3. The entire amount of the deposit or advance, shall be refundable to

the tenant upon the tenant's vacating of the premises except for an

amount lawfully retained for the reasonable and itemized costs due to

non-payment of rent, damage caused by the tenant beyond normal wear and

tear, non-payment of utility charges payable directly to the landlord

under the terms of the lease or tenancy, and moving and storage of the

tenant's belongings. The landlord may not retain any amount of the

deposit for costs relating to ordinary wear and tear of occupancy or

damage caused by a prior tenant.

4. After initial lease signing but before the tenant begins occupancy,

the landlord shall offer the tenant the opportunity to inspect the

premises with the landlord or the landlord's agent to determine the

condition of the property. If the tenant requests such inspection, the

parties shall execute a written agreement before the tenant begins

occupancy of the unit attesting to the condition of the property and

specifically noting any existing defects or damages. Upon the tenant's

vacating of the premises, the landlord may not retain any amount of the

deposit or advance due to any condition, defect, or damage noted in such

agreement. The agreement shall be admissible as evidence of the

condition of the premises at the beginning of occupancy only in

proceedings related to the return or amount of the security deposit.

5. Within a reasonable time after notification of either party's

intention to terminate the tenancy, unless the tenant terminates the

tenancy with less than two weeks' notice, the landlord shall notify the

tenant in writing of the tenant's right to request an inspection before

vacating the premises and of the tenant's right to be present at the

inspection. If the tenant requests such an inspection, the inspection

shall be made no earlier than two weeks and no later than one week

before the end of the tenancy. The landlord shall provide at least

forty-eight hours written notice of the date and time of the inspection.

After the inspection, the landlord shall provide the tenant with an

itemized statement specifying repairs or cleaning that are proposed to

be the basis of any deductions from the tenant's deposit. The tenant

shall have the opportunity to cure any such condition before the end of

the tenancy. Any statement produced pursuant to this subdivision shall

only be admissible in proceedings related to the return or amount of the

security deposit.

6. Within fourteen days after the tenant has vacated the premises, the

landlord shall provide the tenant with an itemized statement indicating

the basis for the amount of the deposit retained, if any, and shall

return any remaining portion of the deposit to the tenant. If a landlord

fails to provide the tenant with the statement and deposit within

fourteen days, the landlord shall forfeit any right to retain any

portion of the deposit.

7. In any action or proceeding disputing the amount of any portion of

the deposit retained, the landlord shall bear the burden of proof as to

the reasonableness of the amount retained.

8. Any person who violates the provisions of this section shall be

liable for actual damages, provided a person found to have willfully

violated this section shall be liable for punitive damages of up to

twice the amount of the deposit or advance.

9. (a) In circumstances where any sum of money or any other thing of

value deposited as security for the full performance by a tenant of the

terms of their lease is not turned over to a successor in interest

pursuant to section 7-105 of this title, the grantee or assignee of the

leased premises shall also be liable to such tenant, upon conveyance of

such leased premises, for the repayment of any such security deposit,

plus accrued interest, as to which such grantee or assignee has actual

knowledge.

(b) For purposes of this section, a grantee or assignee of the leased

premises shall be deemed to have actual knowledge of any security

deposit which is (i) deposited at any time during the six months

immediately prior to closing or other transfer of title in any banking

organization pursuant to subdivision two-a of section 7-103 of this

title, or (ii) acknowledged in any lease in effect at the time of

closing or other transfer of title, or (iii) supported by documentary

evidence provided by the tenant or lessee as set forth in paragraph (c)

of this subdivision.

(c) With respect to any leased premises for which there is no record

of security deposit pursuant to subparagraph (i) or (ii) of paragraph

(b) of this subdivision, the grantee or assignee of the leased premises

shall be obligated to notify the tenant thereof in writing no later than

thirty days following the closing or other transfer of title to the fact

that there is no record of a security deposit for said leased premises

and that unless the tenant within thirty days after receiving notice

provides them or it with documentary evidence of deposit, the tenant

shall have no further recourse against them or it for said security

deposit. For purposes of this subdivision, "documentary evidence" shall

be limited to any cancelled check drawn to the order of, a receipt from,

or a lease signed by any predecessor in interest, if such predecessor's

interest in the leased premises existed on or after the effective date

of this paragraph. Except as otherwise provided by subparagraphs (i) and

(ii) of paragraph (b) of this subdivision, the grantee or assignee of

the leased premises shall not be charged with actual knowledge of the

security deposit where the tenant fails within the thirty-day period to

provide such documentary evidence. Where the grantee or assignee of the

leased premises fails to notify the tenant as specified in this

paragraph within thirty days following the closing or other transfer of

title, the tenant shall be entitled to produce documentary evidence at

any time.

(d) The grantee or assignee of the leased premises shall have the

right to demand that the grantor or assignor thereof establish an escrow

account equal to one month's rent for any leased premises for which

there is no record of a security deposit pursuant to paragraph (b) of

this subdivision to be used for the purpose of holding harmless the

grantee or assignee in any case where, at a date subsequent to the

closing or other transfer of title, the tenant gives notice pursuant to

paragraph (c) of this subdivision.

(e) The liability of a receiver for payment of any security deposit

plus accrued interest pursuant to this subdivision shall be limited to

the amount of such deposit actually turned over to them or it pursuant

to subdivision one of section 7-105 of this title and to the operating

income in excess of expenses generated during their or its period of

receivership.

10. Any agreement by a lessee or tenant of a dwelling waiving or

modifying their rights as set forth in this section shall be absolutely

void.