Published 2026-09-27 · 11 min read

New York Security Deposit Law 2026: Limits, Deadlines & Deductions

New York's deposit rules for most private rentals live in General Obligations Law § 7-108, with trust and interest rules in § 7-103. Section 7-108 caps a deposit or advance at one month's rent, requires an offer of an initial inspection before occupancy and a landlord-initiated offer of a pre-move-out inspection, and gives you 14 days after the tenant vacates to send an itemized statement and return the balance. Miss that deadline and you forfeit any right to retain any portion. A willful violation adds punitive damages of up to twice the deposit or advance, plus actual damages (§ 7-108(1-a)(g)).

The short version: Charge at most one month's rent as a deposit or advance, subject to the subdivision 1-a exclusions and the narrow seasonal-use and owner-occupied cooperative exceptions. Offer the initial inspection after signing and before occupancy; if requested, sign a written condition agreement and never retain for a defect noted in it. Near the end, notify the tenant in writing of the pre-move-out inspection right, inspect in the statutory window if requested, give an itemized list of proposed deductions, and let the tenant cure. Within 14 days after vacating, send the itemized statement and the remaining balance together. Hold every deposit in trust, never commingled, and for six or more family units use an interest-bearing account in a New York banking organization.

What the earlier version of this page got wrong: (1) Scope was misstated as all tenancies except rent-stabilized units under § 7-107. Subdivision 1 actually applies to all dwelling units unless specifically referred to in § 7-107, and subdivision 1-a then excludes units under the city rent and rehabilitation law or emergency housing rent control law, plus several licensed care and retirement categories it lists. (2) The pre-move-out inspection trigger was reversed: the landlord must notify the tenant in writing of the right within a reasonable time after notification of either party's intention to terminate (unless the tenant terminates with less than two weeks' notice); the 48-hour figure is the landlord's notice of the inspection date and time, not the tenant's request rule. (3) The initial inspection in (1-a)(c) was omitted entirely, as were the burden of proof in (1-a)(f), successor liability in subdivision 2, the void-waiver rule in subdivision 3, and the seasonal-use and cooperative conditions in subdivisions 4 to 6. (4) Legal and late fees were called expressly excluded; paragraph (b) instead sets a closed list of retainable costs, and those charges are not in it. (5) A standalone written receipt at collection was claimed under § 7-103; that section requires written notice of the banking organization's name and address and the amount when the money is deposited in a bank — no separate receipt-at-collection duty is stated.

New York's 14-day statement deadline is unforgiving — miss it and you forfeit any right to retain any portion of the deposit. The Security Deposit Disposition & Deadline Tracker ($14.95) keeps your return deadlines, itemized deductions, and inspection records in one spreadsheet so the clock never sneaks up on you.

The statute table

Limits: how much can you charge?

One month's rent, in total. Section 7-108(1-a)(a) covers a deposit or advance, so the two labels share one ceiling: at $1,800 a month, the most you may take is $1,800. A second month collected as an advance does not create a second allowance.

The two named exceptions are conditional. A seasonal-use unit under subdivisions 4 and 5 must be registered with the appropriate local or county registry where the locality has adopted one, must not be rented as seasonal for more than 120 days in a calendar year, and its lease must expressly state the registration and agency, occupancy for seasonal use only for no more than 120 days or a shorter period, and the tenant's primary residence address to return to. An owner-occupied cooperative apartment under subdivision 6 requires the tenant to be the unit owner, purchaser, or shareholder, holding exclusive occupancy under a proprietary lease or occupancy agreement, with the unit outside the Private Housing Finance Law articles listed; purchase-price payments are not a deposit or advance for this purpose.

Subdivision 1-a also excludes the categories in its opening clause, summarized in the corrections note above. There is no small-landlord exemption for an ordinary unit: if it is not specifically referred to in § 7-107 and not excluded, the cap applies. Check yours with the Security Deposit Max Checker.

The 14-day deadline, precisely

Under § 7-108(1-a)(e), within fourteen days after the tenant has vacated, provide the itemized statement indicating the basis for any amount retained and return any remaining portion. A statement without the balance, or money without the itemized basis, does not complete the duty. Failure to provide both within fourteen days forfeits any right to retain any portion. Diary the date before move-out with the Security Deposit Deadline Finder.

When the clocks actually start

• Initial inspection (§ 7-108(1-a)(c)): after initial lease signing but before occupancy begins — the offer, any requested inspection, and the written condition agreement all belong in that window.
• Pre-move-out notice (§ 7-108(1-a)(d)): within a reasonable time after notification of either party's intention to terminate, unless the tenant terminates with less than two weeks' notice. A requested inspection falls no earlier than two weeks and no later than one week before the end of the tenancy, on at least forty-eight hours' written notice of date and time.
• Return (§ 7-108(1-a)(e)): fourteen days after the tenant has vacated — vacating is the trigger named, not lease expiry alone. The opportunity to cure belongs to the pre-move-out stage; it does not extend the 14 days.
• Successor notice (§ 7-108(2)(c)): where no bank or lease record of a deposit exists, the grantee or assignee must notify the tenant in writing no later than thirty days after closing or transfer, and the tenant then has thirty days after receiving notice to provide documentary evidence.

A worked example

Rent is $1,800 a month and you hold an $1,800 deposit, exactly at the cap. The tenant vacates on Monday, March 2, 2026.

• Statement and balance are due within 14 days: Monday, March 16, 2026.
• Lawful itemized deductions total $650 for unpaid rent and documented damage beyond normal wear and tear. The balance due is $1,800 − $650 = $1,150.
• Send the statement and the $1,150 together on or before March 16 and paragraph (e) is satisfied, subject to your burden of proof under paragraph (f) if disputed.
• Send nothing by March 16 and the $650 is forfeited too — the full $1,800 must be accounted for, before any damages analysis below.

Deductions and the itemized list

Paragraph (b) starts from refundability. The entire deposit is refundable except for reasonable and itemized costs due to only: unpaid rent; damage caused by the tenant beyond normal wear and tear; unpaid utility charges payable directly to the landlord under the lease; and moving and storage of the tenant's belongings. The landlord may not retain for ordinary wear and tear or for damage caused by a prior tenant. Attorney fees, late fees, and similar charges are not in this closed list, so do not fund them from the deposit on the assumption that a lease label makes them deductible. Under paragraph (f), in any dispute over the amount retained, the landlord bears the burden of proof on reasonableness — keep invoices, dated photos, and the line-by-line statement. Build it with the Security Deposit Deduction Letter Generator.

The inspections feed this section directly. The initial inspection under paragraph (c) creates the move-in condition record: if the tenant requests it, execute the written agreement before occupancy, noting existing defects, and on vacating you may not retain for a condition noted in it; the agreement is admissible only in deposit proceedings. The pre-move-out inspection under paragraph (d) creates the cure record: after it, give the tenant an itemized statement of proposed repair or cleaning deductions and an opportunity to cure before the tenancy ends; that statement is likewise admissible only in deposit proceedings.

Move-out compliance checklist

1. At signing: offer the initial inspection; if requested, inspect and sign the written condition agreement noting every existing defect before occupancy (§ 7-108(1-a)(c)).

2. On termination notice: notify the tenant in writing of the pre-move-out inspection right and the right to be present, within a reasonable time after notification of either party's intention to terminate, unless the tenant gave less than two weeks' notice (§ 7-108(1-a)(d)).

3. If requested, inspect in the window: two to one weeks before the end of the tenancy, on at least 48 hours' written notice of date and time (§ 7-108(1-a)(d)).

4. Give the proposed-deduction statement and allow cure before the tenancy ends (§ 7-108(1-a)(d)).

5. Log the vacate date and start the 14-day clock. Compare condition against the move-in agreement and strike ordinary wear and tear, prior-tenant damage, and any move-in-noted condition (§ 7-108(1-a)(b), (c), (e)).

6. Itemize only paragraph (b) costs, line by line, with proof for each, because you bear the burden on reasonableness (§ 7-108(1-a)(b), (f)).

7. Send statement and balance together within 14 days after vacating and keep proof of sending; late or missing forfeits all retention (§ 7-108(1-a)(e)).

Interest and where the money sits

Section 7-103(1) is the holding rule: deposit money remains the depositor's money, is held in trust, and must not be mingled with the holder's personal moneys or become the holder's asset, except as § 7-105 provides on transfer. A waiver of § 7-103 is absolutely void (§ 7-103(3)).

When the money is deposited in a banking organization, § 7-103(2) requires written notice to each depositor of the banking organization's name and address and the amount, in a banking organization with a place of business in the state. If the account is interest-bearing, the holder may keep one per cent per annum on the security money as administration expenses, in lieu of all other administrative and custodial expenses; the balance of the interest is the depositor's money, either held in trust until repaid or applied to rent, or paid annually to the depositor. No separate receipt-at-collection duty is stated in § 7-103 beyond that bank notice.

For property with six or more family dwelling units, § 7-103(2-a) makes the interest-bearing account mandatory: deposit the money in a banking organization within the state at the prevailing rate earned by similar deposits in the area. If a lease ends other than when the bank regularly pays interest, § 7-103(2-b) requires paying the tenant the interest the holder is able to collect at termination. Smaller buildings are not under (2-a)'s mandatory account, but the trust, no-commingling, and bank-notice duties still apply.

On a sale, § 7-105 governs turnover, and § 7-108(2) covers a deposit not turned over: the grantee or assignee is liable on conveyance for repayment plus accrued interest to the extent of actual knowledge — deemed for deposits banked under § 7-103(2-a) in the six months before closing, lease-acknowledged deposits, or tenant-documented deposits. With no record, the grantee must give the written no-record notice within 30 days after closing; the tenant then has 30 days to supply documentary evidence (a cancelled check, a receipt from, or a lease signed by a predecessor, within the subdivision's limits), and the grantee may demand the grantor escrow one month's rent. A receiver's liability is limited to the deposit actually turned over under § 7-105(1) plus operating income over expenses during the receivership.

The penalty, spelled out

• Missed statement and return — total forfeiture (§ 7-108(1-a)(e)). No willfulness is required. On the worked example, the $650 in genuine deductions is lost: the tenant is owed the full $1,800, not $1,150.
• Damages (§ 7-108(1-a)(g)). Any violation brings liability for actual damages. A willful violation brings punitive damages of up to twice the deposit or advance: twice $1,800 is $3,600, plus actual damages — two separate measures, not one combined cap.
• No waiver (§ 7-108(3)). An agreement waiving or modifying a tenant's § 7-108 rights is absolutely void, so a lease clause shortening the 14 days or raising the cap protects no one who relies on it.

Keep the inspection notices, condition agreement, proposed-deduction statement, invoices, and proof of timely sending together per unit: that file decides reasonableness, compliance, and any willfulness dispute.

FAQ

Can I require first and last month's rent plus a deposit in New York?

Paragraph (a) caps a deposit or advance at one month's rent total for a covered unit. A month as deposit plus a further month as advance exceeds that ceiling; relabeling does not change it.

What happens if I send the itemized list on day 16?

You have missed § 7-108(1-a)(e) and forfeit any right to retain any portion of the deposit, however genuine the deductions were.

Do I have to offer an inspection before the tenant moves in?

Yes. After signing and before occupancy, § 7-108(1-a)(c) requires offering the tenant an inspection with you or your agent. If requested, execute the written condition agreement noting defects, and do not retain later for a condition noted in it.

Who starts the pre-move-out inspection process?

The landlord. You must notify the tenant in writing of the right to request an inspection and to be present, within a reasonable time after notification of either party's intention to terminate, unless the tenant terminated with less than two weeks' notice (§ 7-108(1-a)(d)). The 48-hour figure is your written notice of the inspection date and time.

Do I owe interest in a 4-unit building?

The mandatory interest-bearing account in § 7-103(2-a) applies at six or more family units. Below that, trust, no-commingling, and written bank notice still apply, and if you use an interest-bearing account you may keep 1% per annum as administration expenses while the balance of interest is the depositor's, held in trust or paid annually. Check local law as well.

Can I deduct a lease-break fee or my attorney's costs?

Not under paragraph (b)'s closed list, which covers only unpaid rent, damage beyond normal wear and tear, unpaid utilities payable directly to you under the lease, and moving and storage of the tenant's belongings. Charges outside that list should not be funded from the deposit.

Does the tenant have to give a forwarding address before the 14 days run?

Paragraph (e) runs the duty from vacating and does not condition it on a forwarding address in its text. Send the statement and balance to the best address you have, keep proof, and do not let an address search consume the 14 days.

I am buying a rental and the seller never turned over the deposit. Am I liable?

Possibly under § 7-108(2), to the extent of actual knowledge as defined there, including banked, lease-acknowledged, or tenant-documented deposits. Use the subdivision's 30-day no-record notice and escrow steps at closing instead of assuming the seller's failure ends the matter.

Read the statute yourself

Primary sources:

• General Obligations Law § 7-108 (New York State Senate) — official text: cap, refundability, both inspections, 14-day return, burden of proof, damages, successor liability, void waiver, seasonal-use and cooperative subdivisions.
• General Obligations Law § 7-103 (New York State Senate) — official text: trust and no-commingling, written bank notice, 1% administration amount, and the six-or-more-units interest-bearing rule.
• General Obligations Law § 7-105 (New York State Senate) — official transfer provision that § 7-108(2) works alongside.
• General Obligations Law § 7-107 (New York State Senate) — official text for the units § 7-108(1) carves out by specific reference.
• GOL § 7-108 (Justia) — the deposits section in Justia's New York codes, for paragraph-by-paragraph cross-checking.
• GOL § 7-103 (Justia) — the money-deposited section in Justia's New York codes, for cross-checking the trust and interest subdivisions.

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Last verified: October 15, 2026. This is general information, not legal advice. Verify with a licensed New York attorney before acting.