New York Security Deposit Laws: HSTPA, GOL, and RPL 238-a

Under New York security deposit laws, a landlord can collect no more than one month’s rent as a deposit, must hold it in a New York trust account separate from personal funds, and must return whatever isn’t kept for lawful deductions within 14 days after you move out. The core rules come from the Housing Stability and Tenant Protection Act of 2019, which rewrote General Obligations Law § 7-108, tightened the trust requirements in GOL § 7-103, and added fee limits under Real Property Law § 238-a. They apply statewide.

The One-Month Cap

GOL § 7-108 caps a residential security deposit at one month’s rent and bars any “deposit or advance” beyond that.¹ A landlord who asks for last month’s rent on top of the security deposit is over the line. So is one who accepts a higher deposit because a tenant offers to pay more to win the unit.

Two narrow situations sit outside the cap: seasonal-use dwellings, like summer rentals, and owner-occupied cooperative apartments.¹ For a standard apartment, house, or condo rental, the one-month limit is absolute.

A fee cannot dodge the cap by wearing a different name. If money you hand over functions as security for the lease, it counts toward the one-month maximum no matter what the paperwork calls it.

How the Deposit Must Be Held

Your deposit stays your money. GOL § 7-103 requires the landlord to hold it in trust, in a bank account within New York State, kept completely separate from personal or business funds.²

Buildings with six or more residential units carry a stricter rule. The deposit has to sit in an interest-bearing account at the prevailing rate for similar deposits in the area. The interest belongs to you; the landlord can take a one percent annual administrative fee and no more.² In smaller buildings, the interest requirement doesn’t apply, but the trust and separation rules still do.

Any lease clause purporting to waive these protections is void.² Sign it if the landlord insists; it still has no legal force.

Your Inspection Rights at Move-In and Move-Out

GOL § 7-108 gives you two separate inspection rights, and both directly affect what a landlord can deduct.

Before You Move In

The landlord must offer to inspect the unit with you before you take occupancy. If you accept, both of you sign a written agreement documenting the existing condition: every scuff, stain, and broken fixture noted at the start. The landlord cannot later charge your deposit for any condition listed in that document.¹ Always request it. A landlord who skips this inspection loses the ability to blame you for anything that predated your tenancy.

Before You Move Out

Once either party gives notice ending the tenancy, the landlord must tell you in writing that you can request a pre-move-out walk-through and be present for it. The inspection has to happen between two weeks and one week before your move-out date, with at least 48 hours’ written notice of the scheduled time.¹

After the walk-through the landlord gives you an itemized statement of repairs or cleaning that could support deductions. You then have until move-out to fix those items yourself. Patch the wall, clean the oven, replace the blind. Anything you handle before returning the keys cannot come out of your deposit. The itemized statement is only admissible in proceedings about the deposit, so a landlord who never provides it has a much harder time justifying deductions later.¹

One catch: if you give less than two weeks’ notice, the landlord’s obligation to offer this inspection doesn’t apply. Adequate notice preserves the right.

The 14-Day Return Deadline and What Can Be Deducted

Within 14 days after you vacate, the landlord must return the remaining deposit and provide an itemized statement of any deductions. Miss the 14-day window and the landlord forfeits the right to keep any part of the deposit, regardless of actual damage.¹ That deadline is what gives the rest of the rules real weight.

Deductions are limited to four categories:

Unpaid rent still owed when you leave.
Damage beyond normal wear and tear. A hole punched in drywall qualifies. Faded paint, minor floor scuffs, and small nail holes from hanging pictures do not.
Unpaid utilities the lease makes payable directly to the landlord, not bills in your own name.
Reasonable costs to move and store personal property left behind.

The landlord cannot charge for routine turnover: repainting between tenants, replacing worn carpet, or the cleaning any apartment needs after years of ordinary use. Deductions for damage caused by a prior tenant are also explicitly barred.¹

Penalties

A landlord who violates these rules is liable for your actual damages. If the violation was willful, courts can add punitive damages of up to twice the deposit amount.¹ “Willful” carries weight. A landlord who miscalculates a deduction sits in different territory than one who keeps the entire deposit and stops answering emails. Courts look at conduct to place a case somewhere on that range.

When the Building Is Sold or Foreclosed

If ownership changes hands, GOL § 7-105 requires the old owner to transfer your deposit to the new owner within five days of the sale closing and to notify you of the transfer by certified or registered mail, including the new owner’s name and address.³

After the transfer, the old owner is released and the new owner is responsible for returning your deposit when your tenancy ends. In a foreclosure, a court-appointed receiver holds the deposit subject to court order. Failure to comply with these transfer obligations is a misdemeanor, not just a civil violation.³

If your building sells and no certified mail notice arrives, follow up right away. Get the new owner’s contact information in writing and confirm they’re holding your deposit.

Application Fees, Late Fees, and Bounced Checks

RPL § 238-a bans most upfront rental fees. A landlord cannot charge anything to process, review, or accept an application. The one carve-out is a background and credit check fee, capped at $20 or the actual cost, whichever is less.⁴

The landlord must give you a copy of any report they pull along with the receipt from the screening company. Without that copy, they can’t collect the fee at all. You can also waive the fee by bringing your own background or credit check from the past 30 days.⁴ If you’re applying to multiple apartments, pay for one report and carry copies.

Late Fees

A landlord cannot charge a late fee unless rent is more than five days past due. When the fee applies, it is capped at $50 or five percent of monthly rent, whichever is less.⁴ On $1,000 rent, that’s $50. On $800 rent, $40. On $2,500 rent, still $50, because the dollar cap kicks in below five percent. A lease setting a higher figure is unenforceable to the extent it exceeds the limit.

Bounced Checks

RPL § 238-a also limits what a landlord can charge when a rent check bounces and prevents them from stacking extra fees beyond what the statute permits.⁴

Getting Your Deposit Back in Court

If a landlord won’t return your deposit or you dispute the deductions, small claims court is the practical path. In New York City the limit is $10,000. In city courts outside NYC the limit is $5,000. Town and village courts cap claims at $3,000.⁵ Most deposit disputes fit well inside those ceilings, and you don’t need a lawyer.

Documentation drives the outcome. The move-in condition agreement is your baseline. Dated photos from move-in and move-out make the comparison concrete. Keep the itemized statement from the pre-move-out inspection, any correspondence about repairs, and proof of the date you vacated. If the landlord missed the 14-day deadline, that alone can entitle you to the full deposit regardless of the unit’s condition.

If your landlord kept the deposit and never sent an itemized statement, and ignored your written demand, that is the pattern the punitive damages provision targets, up to twice the deposit amount.¹

Situations Where Federal Rules Also Apply

State law is the main framework, but three federal overlays change the picture for specific tenants.

Active-Duty Military

The Servicemembers Civil Relief Act lets active-duty personnel end a residential lease early after receiving permanent change-of-station orders, deployment orders of 90 days or more, or separation and retirement orders. You give the landlord written notice with a copy of your orders. The lease ends 30 days after the next rent payment following that notice. The landlord cannot charge early-termination fees or claw back rent concessions or move-in discounts; the Department of Justice treats such clawbacks as illegal penalties. Your deposit is returned under the same New York rules that apply to any other tenant, minus lawful damage deductions.⁶

Disability-Related Modifications

Under the Fair Housing Act, a landlord cannot require a larger security deposit because a tenant asks for a reasonable modification for a disability, such as grab bars, a ramp, or a widened doorway. A landlord who doesn’t otherwise require a deposit can’t impose one for a modification request. In some circumstances the landlord may negotiate an interest-bearing escrow to cover the cost of restoring the unit at the end of the tenancy, but only after weighing the scope of the modification, expected length of tenancy, and tenancy history. The escrow cannot exceed the actual restoration cost, and if the landlord chooses not to restore, the full escrow plus interest goes back to you.⁷

Section 8 Voucher Holders

For certain HUD-assisted Section 8 programs, the deposit is calculated differently: one month’s total tenant payment or $50, whichever is greater, rather than one month’s contract rent. Because the tenant payment in subsidized housing is often well below market, the deposit can be substantially lower. The funds go into a segregated interest-bearing account, and the landlord still has to follow applicable state deposit rules on top of the federal ones.⁸

1
New York State Senate. New York General Obligations Law GOB 7-108
2
New York State Senate. New York General Obligations Law GOB 7-103 – Money Deposited or Advanced as Security for Rental Property
3
New York State Senate. New York General Obligations Law GOB 7-105 – Landlord Failing to Turn Over Deposits
4
New York State Senate. New York Real Property Law RPP 238-A – Limitation on Fees
5
New York Courts. Small Claims
6
U.S. Department of Justice. Financial and Housing Rights
7
U.S. Department of Housing and Urban Development. Reasonable Modifications Under the Fair Housing Act
8
eCFR. 24 CFR 880.608 – Security Deposits