Q. I am applying to rent an apartment in the West Village, and the landlord has asked for the first month’s rent and two month’s security at the lease signing. That’s on top of a 15% broker’s fee, which means I have to come to the table with quite a bit of cash before even moving into the apartment.
I know there is nothing I can do about the rent or broker’s fee, but I wasn’t sure about the security deposit. Is a landlord allowed to ask for two month’s security or are they restricted to one month?
A. It depends. For a market-rate apartment, a landlord can ask for as large of a security deposit as he or she likes.
A large security deposit is often used as a method to help qualify an otherwise unqualified applicant. For example, if the tenant doesn’t meet the income metric (typically annual income needs to meet or exceed 40x the monthly rent), or has less than stellar credit, or poses some other sort of risk to the landlord, the applicant may be able to pay a larger security deposit to offset the perceived risk of their tenancy.
This strategy can also be a good one to keep in mind if you don't meet income requirements or have a guarantor, but you have a significant amount of liquid assets.
The important thing to remember is that if the landlord is requesting a larger security deposit, your application would probably not be accepted without it.
That being said, you may able to negotiate. For example, if the landlord asks for six month’s security in lieu of a guarantor, you could counter at four months. If, as is the case here, the landlord asks for two month’s security, then you might ask that one month be returned in the second year of the lease if your payment history has been unblemished.
Unlike market-rate apartments, security deposits for rent-stabilized apartments are regulated. The landlord may not ask for more than one month’s rent as security.
Though this rule was generally intended to protect prospective tenants, it often has the opposite effect. Because the security deposit cannot be used to make a risky tenant more palatable, it can't be used as a tool to help prospective tenants overcome any flaws in their application. For this reason, the tenant must meet every application requirement of the landlord or use a guarantor that meets the requirements. If they are unable to do either, their application will be rejected.
To find out if an apartment you're considering is rent stabilized, check the lease, as all stabilized apartments are required to use a specific lease designed for this purpose and it will be made clear on the document if that’s what you’re dealing with.
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.
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