As a property owner in New York City, you often find yourself in the position of having to place a great deal of trust in parties that you do not know with when leasing or renting out your units. While your relationship provides benefits to both sides (they make use of the space, you benefit financially), there still may be a certain amount of hesitancy regarding your lack of familiarity.
The security deposit paid upon securing the property may help to offset that. That often leads to the question that many clients bring to us here at Nadel & Ciarlo (and one that you may share): when can a landlord keep a security deposit?
Covering missed rent payments
According to information provided from the New York Attorney General’s Office, you can lawfully keep a tenant’s security deposit in two scenarios: where the tenant has rent payment arrears, and where damage occurred to the property during the residency. In the case of the former, you need to be able to provide proof that the tenant was not current on their rent payments. Maintaining up-to-date records detailing monthly or quarterly rent payments will ensure that you have such evidence to provide should a dispute arise.
Keeping a deposit to cover repair costs
Should damage occur on your property during the time in which a tenant occupies it, you can use their security deposit to help cover the repair costs. Again, you need to show that there was damage and exactly how much the costs were to repair it. Conducting routine inspections of your properties to spot damages and sharing copies of the bills and invoices the come from repair providers with tenants will answer any question as to your use of their deposit.