Ask Sam: Can my landlord withhold my security deposit in exchange for an extra free month?

By Himmelstein McConnell Gribben & Joseph LLP | February 2, 2017 - 1:59PM

The new owners of my building won't be renewing leases, and are converting the building into condos. They also won't give back security deposits, and instead are saying that tenants can stay for that month "free." In my case, that means 3 months, since that's how much I put down. Is it legal for them to withhold the security deposits in this way? What if I find a new apartment once my lease is up and want to leave before the end of the 3 extra months? Can they still withhold my deposit?

Your landlord does legally have to return your deposit, though it may be a better deal to accept the extra months in your apartment, says Sam Himmelstein, a lawyer who represents residential and commercial tenants and tenant associations.

However, before you make any decisions, Himmelstein recommends checking into your apartment's rent stabilizations status. (If the building has more than six units, there's a good chance the apartments are under rent stabilization.) "You may not want to pack your bags without looking into your rent history, because you may have a right to stay," says Himmelstein. (You can find more tips on finding out your apartment's rent history and rent stabilization status here.)

But if you do, indeed, have to move out, accepting the landlord's offer might not be such a bad idea. "We all know that a lot of landlords don't return security deposits, often without having any legal basis to to do so," says Himmelstein. "In fact, it's usually the tenants who want to apply the last month's rent as a way to get around that. It's not technically legal, but people do it all the time."

Provided the landlord is offering extra time in the apartment that's equivalent to what you paid, says Himmelstein, "This is a guaranteed way of getting your security back. If it's an even trade, I would say go ahead and do it."

That said, if you don't want to stay for the full three months, the landlord is legally obligated to return your deposit. "You're not on the lease for these extra months, so you have the right to leave any time, and any security has to be returned to you," says Himmelstein. "If you only stay for one month, you're entitled to get the other two months' deposit back."

If the landlord refuses to pony up, first, you should write a letter demanding it back. (As always with landlord dipsutes, a paper trail is helpful.) Failing that, you could sue in small claims court (provided that the amount in question is less than $5,000 or in Civil Court if the amount is between $5000-$25,000), or file a complaint with the Attorney General's office, which has a service that mediates these types of disputes.

"Legally, a landlord can't withhold security unless the tenant owes rent money or left the apartment in disrepair," says Himmelstein. "I always recommend that when tenants leave, they photograph every single room, wall, floor, etc. Or even better, take video, so that you have proof if the landlord later claims there was damage."

"Anecdotally, based upon the inquiries I get from prospective clients, it’s clear that there's so much abuse of security deposit refunds," says Himmelstein. So if you can stay for the three months rather than battling it out, that's likely your safest bet.

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Sam Himmelstein, Esq. represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts, and many other issues. He is a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan. To submit a question for this column, click here. To ask about a legal consultation, email Sam or call (212) 349-3000.

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