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Rent Coach: My landlord says he's not allowed to take a bigger security deposit. Is that true?

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Q. I’m in the process of applying for a new apartment to rent and have run into a snag. My income is slightly lower than the requisite 40x the monthly rent, so I offered to pay three months’ security to secure the apartment.

I’ve done this before with another landlord and it was not a problem at all. This time, the broker for the landlord came back and said that they’re not legally allowed to accept more than one month’s security. Is that true?

A. It’s common for landlords to compensate for deficiencies in a prospective tenant’s application by adjusting their requirements for upfront rent or the security deposit. For example, a tenant with a low credit score, income, or assets might offer two to six months in security to offset the landlord’s perceived risk.

Given that it typically takes many months to evict a deadbeat tenant in NYC, landlords are only protected if they have sufficient funds in the security deposit to cover the months they don’t receive rent prior to the Housing Court agreeing to evict the non-performing tenant.

All of this being said, the state’s Rent Stabilization law does not permit landlords to accept more than one month’s security from a tenant. That means that owners of rent stabilized apartments are significantly constrained when it comes to working with prospective tenants that don’t have airtight applications.

The purported public policy is to protect tenants from landlords who gauge them for larger than fair deposits. Of course, there are unintended consequences to the law as you have discovered.

There are potential alternatives that you could employ, but they’re not as simple as ponying up additional funds at the lease signing.

For example, you could use a guarantor who could sign an agreement promising to fulfill your obligations in the event that you do not. Guarantors typically need to earn an annual salarly of around 80 times the monthly rent and often need to be located in the tri-state area. If you don’t know anyone, you might be able to pay an institutional guarantor,  Insurent, to step in for a fee of about a month's rent.  

Alternatively, you could seek a roommate and combine your incomes to meet the 40x threshhold (assuming the landlord permits shares).

Lastly, if you’re close to the 40x threshhold and the landlord might be somewhat flexible, try to make your case in a cover letter. If you have substantial liquid assets, a solid job history, a high credit score, and a good landlord reference letter, point all of that out and express that you believe you’d make a great tenant despite a minor deficiency in your application. This probably won’t work with a large management company but it might if the landlord actually reviews your application.


Mike Akerly is a New York City real estate attorney, landlord, and real estate broker. He is also the publisher of the Greenwich Village blog VillageConfidential    

Note: The information provided here is for informational purposes only. It should not be construed as legal advice and cannot substitute for the advice of a licensed professional applying their specialized knowledge to the particular circumstances of your case.

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