Security Deposit Demand Letter - New York

SECURITY DEPOSIT DEMAND LETTER

STATE OF NEW YORK

Housing Stability and Tenant Protection Act (HSTPA) 2019

SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND FIRST-CLASS MAIL

[__/__/____]

[LANDLORD/PROPERTY MANAGER NAME]
[ADDRESS LINE 1]
[CITY, STATE ZIP]

Re: FORMAL DEMAND — RETURN OF SECURITY DEPOSIT
Former Tenant(s): [TENANT FULL NAME(S)]
Rental Property Address: [FULL RENTAL ADDRESS]
Lease Term: [__/__/____] through [__/__/____]
Move-Out / Possession Delivered Date: [__/__/____]
Security Deposit Amount: $[________________________________]
14-Day Return Deadline (RPL § 227-e): [__/__/____]

Dear [LANDLORD/PROPERTY MANAGER NAME]:

This law firm represents [TENANT FULL NAME] ("Tenant") in connection with your failure to return the security deposit for the above-referenced premises in accordance with the New York Housing Stability and Tenant Protection Act of 2019 ("HSTPA") and the New York General Obligations Law. This letter constitutes formal written demand for the immediate return of our Client's security deposit plus all applicable statutory damages, interest, and penalties.

I. NEW YORK LEGAL FRAMEWORK

A. The Housing Stability and Tenant Protection Act of 2019

New York's HSTPA, signed into law on June 14, 2019, fundamentally restructured security deposit law in New York. The primary provisions are codified at Real Property Law ("RPL") §§ 227-e and 227-f, which supersede prior GOL § 7-108 in most respects for tenancies entered into or renewed on or after June 14, 2019.

RPL § 227-e imposes on landlords:

1. A hard one-month rent cap on deposits and all advance payments (other than first month's rent) for all residential leases — regardless of tenancy type, rent level, or market conditions. RPL § 227-e(1).
2. A 14-calendar-day return deadline running from the date the tenant vacates the unit and delivers possession. RPL § 227-e(3). This is among the shortest deadlines in the nation.
3. A requirement to return the deposit together with a written, itemized statement specifying each deduction, supported by documentation. RPL § 227-e(3).
4. A rule that failure to provide the itemized statement within 14 days operates as a forfeiture — the landlord loses all right to retain any portion of the deposit. RPL § 227-e(3).
5. A prohibition on requiring a tenant to pay any fee for a move-out inspection. RPL § 227-e(4).

RPL § 227-f — Willful Violation Penalty:

Where a landlord willfully violates RPL § 227-e, the court may award the tenant up to twice the amount of the deposit wrongfully withheld, in addition to actual damages. This is a punitive multiplier, not a cap on other remedies.

B. Trust Obligations — GOL § 7-103

The security deposit is not landlord's money. Under GOL § 7-103(1), a landlord who holds a security deposit holds those funds in trust for the tenant's benefit. Commingling of security deposit funds with the landlord's personal or operating funds is a violation of GOL § 7-103 and may independently entitle the tenant to return of the full deposit.

C. Interest-Bearing Account Requirement — GOL § 7-103(2-a)

For buildings containing six (6) or more residential units, the landlord must:

• Deposit and hold the security deposit in an interest-bearing account in a New York banking institution (not merely any financial institution). GOL § 7-103(2-a).
• Notify the tenant in writing of the name and address of the banking organization and the account number within 30 days of receiving the deposit. GOL § 7-103(2).
• The landlord may retain an annual administrative fee of 1% of the deposit amount; all remaining interest belongs to the tenant. GOL § 7-103(2-a).
• Upon request, the tenant may elect to have the interest credited toward rent. GOL § 7-103(2-a).

D. Permissible Deductions Under RPL § 227-e

A landlord may deduct only for:

1. Unpaid rent — but NOT for rent owed after the tenant vacated if the landlord failed to mitigate.
2. Physical damage beyond normal wear and tear, supported by receipts or invoices reflecting actual costs.
3. Reasonable moving and storage costs if the tenant abandoned the unit and left property behind.

E. Prohibited Deductions

The following are not lawful deductions under New York law:

• Normal wear and tear (paint fading, minor scuffs, carpet wear in traffic areas, door handle wear)
• Conditions that preexisted the tenancy as shown by the move-in inspection or photos
• Conditions resulting from the landlord's own failure to maintain the premises under RPL § 235-b
• Repainting costs for routine end-of-tenancy repainting (not caused by tenant damage)
• General cleaning when the tenant left the unit in reasonably clean condition
• Amounts unsupported by receipts, invoices, or contractor estimates

F. NYC-Specific Overlay — NYC Admin. Code § 26-1105

For tenancies in New York City, additional protections apply under the NYC Administrative Code § 26-1105 (enacted as part of the NYC Tenant Protection Act):

• Landlords must offer a move-out inspection to the tenant before the tenancy ends and provide a written report. NYC Admin. Code § 26-1105(a).
• The tenant has the right to cure any identified deficiencies before the lease ends to avoid deductions. NYC Admin. Code § 26-1105(b).
• Failure to offer a pre-move-out inspection may bar the landlord from making deductions for conditions that could have been identified and cured. NYC Admin. Code § 26-1105(c).

G. Rent-Stabilized and Rent-Controlled Units

For rent-stabilized apartments (most buildings built before 1974 with 6+ units in NYC and certain municipalities), the NYC Rent Stabilization Code § 2525.4 requires the landlord to return the deposit within the same 14-day window and imposes additional duties overseen by the NYC Office of Rent Administration (ORA) / Division of Housing and Community Renewal (DHCR). Security deposit overcharges in rent-stabilized tenancies may trigger DHCR overcharge proceedings with treble damages for willful overcharge.

II. FACTUAL BACKGROUND

A. Tenancy Information

B. Move-Out Circumstances

Notice Provided by Tenant:

• Date Notice Given to Landlord: [__/__/____]
• Notice Period: [________________________________] days
• Method of Notice: ☐ Hand-delivered ☐ Certified mail ☐ Email ☐ Text ☐ Other: [____]

Delivery of Possession:

• Date Keys Returned / Surrendered: [__/__/____]
• Method of Key Return: ☐ In person ☐ Drop box ☐ Certified mail ☐ Other: [____]
• Forwarding Address Provided: ☐ Yes — Date: [__/__/____] ☐ No

Move-Out / Pre-Move-Out Inspection (NYC):

• Pre-Move-Out Inspection Offered by Landlord: ☐ Yes ☐ No ☐ Not applicable (outside NYC)
• Pre-Move-Out Inspection Conducted: ☐ Yes — Date: [__/__/____] ☐ No ☐ Refused by landlord
• Written Pre-Move-Out Report Provided to Tenant: ☐ Yes ☐ No
• Final Move-Out Inspection: ☐ Conducted — Date: [__/__/____] ☐ Requested but refused ☐ Not offered

C. Condition of Premises at Move-Out

☐ Clean and undamaged — The premises were left in substantially the same condition as received, reasonable wear and tear excepted, as documented by photographs dated [__/__/____].

☐ Professionally cleaned — Tenant hired [________________________________] to professionally clean the premises on [__/__/____]. Receipt enclosed.

☐ All personal property removed — All belongings were removed prior to key surrender.

☐ No damage beyond normal wear and tear — Any changes to the premises resulted from ordinary, expected use during the tenancy.

☐ Photographic documentation — Tenant has timestamped photographs taken at both move-in ([__/__/____]) and move-out ([__/__/____]).

III. LANDLORD'S VIOLATIONS

The following violations have occurred. Check all that apply:

☐ Failure to Return Deposit Within 14 Days [RPL § 227-e(3)]:
As of the date of this letter, [____] days have elapsed since Tenant vacated on [__/__/____]. The 14-day statutory deadline expired on [__/__/____]. You have failed to return any portion of the $[________________________________] deposit.

☐ Failure to Provide Written Itemized Statement [RPL § 227-e(3)]:
You failed to provide a written itemized statement of deductions within the 14-day period. Under RPL § 227-e(3), this failure constitutes an automatic forfeiture of your right to retain any portion of the deposit. The entire deposit is now owed to Tenant regardless of any claimed deductions.

☐ Deficient or Unsupported Itemized Statement:
You purported to provide an itemization on [__/__/____], but it is legally inadequate because:

• ☐ Deductions are not supported by receipts or invoices
• ☐ Deductions are for normal wear and tear
• ☐ Deductions are for conditions preexisting the tenancy
• ☐ Deductions exceed actual repair costs
• ☐ Other deficiency: [________________________________]

☐ Illegal Excess Security Deposit [RPL § 227-e(1)]:
You collected a deposit of $[________________________________], which exceeds one month's rent of $[________________________________] by $[________________________________], in violation of the HSTPA's hard cap. The excess must be returned immediately.

☐ Failure to Hold Deposit in Trust / Commingling [GOL § 7-103(1)]:
Evidence indicates the deposit was not held in a separate trust account and was commingled with your operating funds, violating the trust obligation under GOL § 7-103(1). This entitles Tenant to immediate return of the entire deposit.

☐ Failure to Deposit in Interest-Bearing Account [GOL § 7-103(2-a)]:
The building contains [____] residential units (6 or more). You failed to deposit the security funds in an interest-bearing account at a New York banking organization, as required by GOL § 7-103(2-a).

☐ Failure to Notify Tenant of Banking Information [GOL § 7-103(2)]:
You failed to provide written notice of the name and address of the banking organization and the account number within 30 days of receiving the deposit.

☐ Failure to Pay Accrued Interest [GOL § 7-103(2-a)]:
You have failed to account for and remit accrued interest (minus the 1% administrative fee) on the deposit held from [__/__/____] through [__/__/____].

☐ Failure to Offer Pre-Move-Out Inspection [NYC Admin. Code § 26-1105]:
This is an NYC tenancy. You failed to offer Tenant a pre-move-out inspection prior to the lease expiration, thereby forfeiting your right to make deductions for conditions that could have been identified and cured.

☐ Willful Violation [RPL § 227-f]:
Your retention of the deposit is willful and in bad faith, evidenced by: [________________________________]. Tenant is entitled to up to twice the deposit amount as a penalty.

IV. NORMAL WEAR AND TEAR — NEW YORK STANDARD

Under New York case law and RPL § 227-e, "normal wear and tear" means deterioration resulting from ordinary and reasonable use of the premises. New York courts have consistently held the following are not chargeable to a tenant:

☐ Minor scuff marks or small nail holes from hanging pictures
☐ Faded or lightly soiled paint after a tenancy of two or more years (DHCR Operational Bulletin 2016-1 guidance for rent-stabilized units)
☐ Worn or compressed carpet in high-traffic areas
☐ Minor scratches on hardwood floors consistent with foot traffic
☐ Light dust or ordinary soil requiring standard cleaning
☐ Worn finish on bathroom fixtures or tub
☐ Loose hinges, minor door alignment issues
☐ Faded or slightly yellowed window blinds
☐ General cleaning after a clean, ordinary occupancy
☐ Other: [________________________________]

If landlord has deducted for any of the above, those deductions are unlawful and the amounts must be returned.

V. DAMAGES AND REMEDIES

A. Security Deposit and Interest Calculation

B. Statutory Penalty — RPL § 227-f (Willful Violation)

Under RPL § 227-f, where a landlord willfully violates RPL § 227-e, the court may award the tenant:

C. Consequential and Incidental Damages

D. Attorney's Fees and Costs

E. Total Demand

VI. EVIDENCE IN OUR POSSESSION

Our Client has preserved the following:

☐ Original lease agreement (with all riders)
☐ Receipt or cancelled check for security deposit payment
☐ Written notice of banking institution and account number (or lack thereof)
☐ Move-in inspection report / condition checklist
☐ Timestamped photographs of premises at move-in
☐ Timestamped photographs of premises at move-out
☐ Video walkthrough at move-out
☐ Copy of written notice to vacate with proof of delivery
☐ Keys return receipt or acknowledgment
☐ Written forwarding address notice to landlord
☐ NYC pre-move-out inspection report (if applicable)
☐ Receipts for professional cleaning
☐ Landlord's itemized statement (if provided) and analysis of deficiencies
☐ Correspondence with landlord regarding deposit
☐ Annual interest statements or banking records (if any provided)
☐ DHCR registration records (for rent-stabilized units)
☐ Witness statements regarding condition of premises
☐ Other: [________________________________]

VII. FORMAL DEMAND

We hereby demand that you take the following actions within fourteen (14) days of the date of this letter:

1. Return the security deposit in full — $[________________________________], plus accrued interest of $[________________________________].

2. Pay the RPL § 227-f statutory penalty — $[________________________________] for willful violation.

3. Pay attorney's fees and costs — $[________________________________].

4. TOTAL PAYMENT DUE: $[________________________________]

Payment must be made by certified check or money order, payable to [TENANT FULL NAME], and delivered to:

[LAW FIRM NAME]
[ADDRESS]
[CITY, STATE ZIP]

Reference: [TENANT FULL NAME] / [PROPERTY ADDRESS] — Security Deposit

VIII. CONSEQUENCES OF NON-COMPLIANCE

If you fail to comply with this demand within 14 days, we are authorized and prepared to:

1. File suit in New York Small Claims Court or Civil Court — NYC Civil Court hears claims up to $10,000; NYC Small Claims handles up to $10,000 for individual tenants; Town/Village courts handle up to $5,000. For larger claims, we will file in Supreme Court, [________________________________] County.

2. Seek forfeiture of all deduction rights — Under RPL § 227-e(3), your failure to provide a compliant itemized statement forfeits your right to withhold any portion of the deposit as a matter of law.

3. Seek RPL § 227-f damages — For willful violations, we will request that the court award up to twice the deposit amount as a statutory penalty.

4. File regulatory complaints with:
   - New York State Attorney General — Tenant Protection Unit (212-416-8000)
   - NYC Department of Housing Preservation and Development (HPD) — for NYC properties
   - NY Division of Housing and Community Renewal (DHCR) / Office of Rent Administration — for rent-regulated units
   - NYC Mayor's Office to Protect Tenants
   - NYC Civil Court Housing Part (Housing Court)

5. Enforce any judgment through all available legal means, including information subpoenas, restraining notices, income execution (wage garnishment), property execution, and judgment liens on real property under CPLR Article 52.

IX. RESERVATION OF RIGHTS

This letter is sent without prejudice to any and all rights and remedies available to our Client under New York state law, federal law, the lease agreement, and common law, all of which are expressly reserved. Nothing herein constitutes a waiver of any claim or right.

Respectfully submitted,

[LAW FIRM NAME]

By: _________________________________
[ATTORNEY NAME]
New York Attorney Registration No. [________________________________]
[ADDRESS]
[CITY, NEW YORK ZIP]
[TELEPHONE]
[FAX]
[EMAIL]

Attorneys for [TENANT FULL NAME]

ENCLOSURES:
☐ Copy of lease agreement (with all riders)
☐ Copy of security deposit receipt / cancelled check
☐ Move-in / move-out photographs (USB drive or printed)
☐ Copy of written notice to vacate with proof of delivery
☐ Written forwarding address notice
☐ NYC pre-move-out inspection report (if applicable)
☐ Copy of landlord's itemization (if provided), with Tenant's rebuttal
☐ Cleaning receipts / contractor estimates
☐ Interest calculation worksheet
☐ Authorization to represent (client file)

cc: [TENANT NAME]
[PROPERTY MANAGEMENT COMPANY, if applicable]
[PROPERTY OWNER, if different from addressee]
[CLIENT FILE]

NEW YORK SECURITY DEPOSIT QUICK REFERENCE

NEW YORK PRACTICE NOTES FOR ATTORNEYS

☐ 14-Day Rule Is Strict: Courts have consistently enforced the 14-day deadline with no grace period. If the landlord missed the deadline, the tenant is entitled to return of the full deposit before any merits inquiry into the condition of the premises.

☐ RPL § 227-f vs. GOL § 7-103: RPL § 227-f (HSTPA 2019) is the modern penalty provision for residential leases. GOL § 7-103 trust and interest obligations remain independently enforceable. Plead both where applicable.

☐ NYC Pre-Move-Out Inspection Is a Trap for Landlords: In NYC, failure to offer the pre-move-out inspection is frequently a complete bar to deductions. Make this a threshold argument in every NYC case.

☐ Rent-Stabilized Units: File a DHCR overcharge complaint if the deposit exceeded the legal regulated rent or was improperly applied. DHCR has separate jurisdiction and a three-year lookback (or longer for fraud).

☐ Commingling: If you can show the landlord never opened a separate trust account, you may be entitled to immediate return of the full deposit under GOL § 7-103(1) without needing to show damage.

☐ Interest Calculation: For 6+ unit buildings, request banking records via subpoena or document demand. Landlords often fail to maintain interest-bearing accounts and cannot prove they paid interest.

☐ Attorney's Fees: While not expressly provided by RPL § 227-e, attorney's fees may be available through lease provisions (check the lease carefully) or if the matter is litigated as a GBL § 349 deceptive practice claim.

☐ Venue: NYC Housing Court (Civil Court Housing Part) is the natural forum. Outside NYC, use the local City Court, Town/Village Court, or Supreme Court depending on amount.

☐ Electronic Filing (NYSCEF): Supreme Court matters in NYC and many counties require NYSCEF filing. Review NYSCEF mandatory e-filing counties before commencing suit.

SOURCES AND REFERENCES

• NY Real Property Law § 227-e: https://www.nysenate.gov/legislation/laws/RPP/227-E
• NY Real Property Law § 227-f: https://www.nysenate.gov/legislation/laws/RPP/227-F
• NY General Obligations Law § 7-103: https://www.nysenate.gov/legislation/laws/GOB/7-103
• NY General Obligations Law § 7-108: https://www.nysenate.gov/legislation/laws/GOB/7-108
• NYC Admin. Code § 26-1105: https://codelibrary.amlegal.com/codes/newyorkcity/latest/NYCadmin/0-0-0-116483
• Housing Stability and Tenant Protection Act of 2019 (full text): https://www.nysenate.gov/legislation/bills/2019/S6458
• NYC DHCR — Tenant's Rights Guide: https://hcr.ny.gov/system/files/documents/2020/03/tenants-rights-guide.pdf
• NYC Office of Rent Administration (DHCR): https://hcr.ny.gov/
• NYC Housing Court (Civil Court Housing Part): https://www.nycourts.gov/courts/nyc/housing/
• NY AG Tenant Protection Unit: https://ag.ny.gov/resources/individuals/housing-and-real-estate/tenants-rights

This template is for informational purposes only and does not constitute legal advice. New York security deposit law changed significantly with the HSTPA in 2019. Consult a licensed New York attorney before use.