New York runs the fastest deposit clock of any state we cover. Since the Housing Stability and Tenant Protection Act of 2019 rewrote N.Y. Gen. Oblig. Law § 7-108, a landlord has 14 days after the tenant vacates to send an itemized statement and return the balance — and the statute spells out the consequence in one sentence: miss the deadline and you "forfeit any right to retain any portion of the deposit." Not just the disputed part. All of it, including deductions you could have proven.
Add the one-month cap, two mandatory inspection offers, and punitive damages of up to twice the deposit for willful violations, and § 7-108 deserves a closer read than most NY landlords have given it.
The cap: one month — and no "first, last, and security"
§ 7-108(1-a)(a) says no deposit or advance may exceed one month's rent. The "or advance" matters: the traditional first-month + last-month + security-deposit move-in package is now illegal in New York. One month of prepaid rent plus one month of security already puts the "advance" over the line — you may collect the first month's rent and a deposit of at most one more month, and nothing else up front. The statute carves out only seasonal-use units (with a required notice) and owner-occupied cooperative apartments.
The cap applies to virtually all non-rent-regulated dwelling units; rent-stabilized units follow their own rules under § 7-107, and a short list of care facilities and retirement communities is exempt.
The deposit stays the tenant's money
Under N.Y. Gen. Oblig. Law § 7-103, a deposit is trust money — it may not be commingled with the landlord's personal or business funds. In buildings of six or more units, it must sit in an interest-bearing New York bank account, with the interest belonging to the tenant (the landlord may keep an administrative fee of 1% a year). Smaller landlords escape the interest-account duty but never the no-commingling rule — the same trap that catches casual landlords under Massachusetts's separate-account regime, though New York at least doesn't demand a specific account per tenancy for small buildings.
Two inspections, both with paper trails
Move-in (§ 7-108(1-a)(c)): after the lease is signed but before occupancy, you must offer the tenant the chance to inspect the unit with you. If they take it, you both sign a written agreement documenting existing conditions — and anything listed in it is off-limits for deductions at move-out.
Move-out (§ 7-108(1-a)(d)): unless the tenancy ends on under two weeks' notice, you must tell the tenant in writing that they're entitled to an inspection. If requested, it happens no earlier than two weeks and no later than one week before the end of the tenancy, on at least 48 hours' written notice. Afterward you hand over an itemized statement of proposed deductions — and the tenant gets the chance to cure before leaving.
Skipping the offer doesn't just breach the statute; it strips you of your best evidence when the deduction fight comes.
Fourteen days, or everything comes back
§ 7-108(1-a)(e) is the teeth. Within 14 days of the tenant vacating you must deliver an itemized statement of any deductions and return the rest of the deposit. The deadline doesn't wait for a forwarding address the way Texas's 30-day rule does, and there's no sworn-statement formality — just a brutal clock with a total-forfeiture backstop.
What may be deducted at all is a short list (§ 7-108(1-a)(b)): unpaid rent, damage beyond normal wear and tear, unpaid utility charges the lease makes the tenant's responsibility, and the cost of moving and storing the tenant's belongings. Ordinary wear and tear is never deductible, and neither is anything you documented as pre-existing at the move-in inspection.
The penalty: punitive damages up to twice the deposit
A landlord who willfully violates § 7-108 is liable for punitive damages of up to twice the deposit, on top of actual damages (§ 7-108(1-a)(g)). Between forfeiture for lateness and doubling for willfulness, a mishandled $3,500 Brooklyn deposit can turn into a $10,500 judgment. You can see how New York's 14-day clock stacks up against every other state we cover — most allow 21 to 45 days — on our security deposit laws by state comparison page.
Common mistakes
Collecting last month's rent up front. Pre-2019 habits die hard. Any advance beyond one month's rent violates § 7-108(1-a)(a) — the deposit cap and the prepaid-rent limit are the same ceiling.
Treating day 15 as "close enough." The forfeiture in (e) is automatic and total; courts have not been sympathetic to near misses.
Skipping the inspection offers. Both the pre-occupancy and pre-move-out offers are mandatory, and the move-out one comes with the tenant's right to cure — a step that also protects you by settling the deduction list before the 14-day sprint starts.
Commingling the deposit. § 7-103 makes the deposit trust money from day one, in buildings of any size.
Deducting for repainting and carpet wear. Normal wear and tear is outside the (b) list, full stop.
A compliant New York residential lease agreement is half of this — the other half is screening well in the first place, since NY's caps leave you less cushion when a tenancy goes wrong. Our guide to New York tenant screening red flags covers what the law lets you check.
Build a compliant New York lease — $29 one-time, generated in minutes, with the § 7-108 deposit clause, inspection mechanics, and required NY disclosures built in. New to deposits? Start with the security deposit glossary entry.
Statutory references
- N.Y. Gen. Oblig. Law § 7-108(1-a)(a) — deposits and advances capped at one month's rent; seasonal-use and owner-occupied co-op exceptions. Official text
- § 7-108(1-a)(b) — permitted deductions: unpaid rent, damage beyond normal wear and tear, unpaid utilities, moving/storage; wear and tear barred.
- § 7-108(1-a)(c)–(d) — pre-occupancy inspection with written condition agreement; move-out inspection offer (two-weeks-to-one-week window, 48-hour notice, itemized statement, right to cure).
- § 7-108(1-a)(e) — 14-day itemized statement + return; failure forfeits any right to retain any portion.
- § 7-108(1-a)(g) — willful violation: punitive damages up to twice the deposit.
- N.Y. Gen. Oblig. Law § 7-103 — deposit held in trust, no commingling; six-plus-unit buildings require an interest-bearing NY account (1% admin fee). Official text