Legislation Introduced to Regulate Security Deposits
City and state legislation recently was introduced that would regulate security deposits on apartment rentals. State Senator Brad Holyman, who represents much of Downtown and Midtown Manhattan, is a co-sponsor of the state legislation. And Councilmembers Carlina Rivera and Keith Powers introduced several bills at the city level.
The proposed legislation would limit brokers’ fees and the amount that owners could charge for security deposits to one month’s rent; allow for deposits to be paid in up to six installments over a six-month time frame; require owners to process deposits within two months of the end of the lease; require brokers to provide tenants with an itemized report that documents their fee structures; and create a protection program where a third party would hold the deposit, make sure it’s returned, and resolve disputes between owner and tenant.
The legislative focus on broker fees and security deposits follows a report released last July by City Comptroller Scott Stringer. The report estimated that New Yorkers spent more than $500 million in security deposits in 2016. It said that many low-income residents not in rent-regulated apartments often pay more than the typical deposit fee of one months’ rent, especially those with lower credit scores. The report further said that prospective renters also sometimes have to pay fees for background and credit checks.