Q: I live in a rent-stabilized apartment in Bay Ridge, Brooklyn. Every time I renew my lease, I’m asked to pay a little extra to add to my original security deposit, so it matches the new monthly rent. Is this a normal practice? I’ve lived here for more than 10 years, but it appears that the account that holds my deposit was opened very recently. I don’t think my deposit has been earning interest. How do I address this?
A: Security deposits are meant to cover any damages to an apartment that are caused by the tenant. They are heavily regulated in New York, and your landlord must follow the law.
A landmark New York housing law passed in 2019 limited the amount that a landlord can collect for a security deposit to one month’s rent, which meant tenants no longer had to pay multiple months’ rent just to secure an apartment.
It may seem strange that you are being asked for more money each time your lease renews, but it is legal for the deposit to increase as your rent increases. If your rent goes up, the landlord can ask for the difference between the new and old rents to supplement the existing security deposit.
Even if you are exempt from rent increases through programs for eligible senior citizens or people with disabilities, you have to pay the increase once per lease renewal so it can be added to your deposit.
As to your suspicion that your deposit is not being held in an interest-bearing account: Rent-stabilized tenants must have their security deposits held in interest-bearing accounts in a New York state bank. Your landlord is entitled to an annual administrative fee of 1 percent of that deposited amount. You have a choice of having the landlord pay you the interest annually, apply it to your rent, or hold it in trust until it is repaid.
Unfortunately, said Rosalind Black, the citywide housing director at Legal Services NYC, “bank accounts have been paying such low interest rates that there will usually not be an interest owed to the tenant on the security deposit.”
If your deposit should be earning interest for you, you can file a complaint to the New York state attorney general’s office, but only after you have tried to work it out with your landlord first. You can also file a case in small claims court.
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