security deposit interest nyc rules start with New York General Obligations Law section 7-103, which says your deposit is still your money while your landlord holds it. If your building has six or more apartments, your landlord must keep it in an interest-bearing account, and all of the interest except 1% per year belongs to you. That is the core of security deposit interest nyc.
What Security Deposit Interest NYC Actually Says
If a letter from your landlord mentions “section 7-103,” it is usually a bank notice. The law makes landlords tell you where your deposit is held, so the letter is often just the landlord following the rules. However, keep it. It is proof of how much you paid and where the money went.
The heart of security deposit interest nyc is simple. Your deposit is held “in trust” for you. The landlord may not mix it with their own money or treat it as their asset. In most cases, it has to sit in a separate bank account in New York State. Any interest it earns follows the same rule and stays your money.
The law does not set a fixed interest rate. Instead, section 7-103(2-a) says the account must earn “the prevailing rate” that similar deposits earn at banks in your area. As a result, the dollar amount is often small, but it adds up over a long tenancy. Security deposit interest nyc is about your right to that money, however small it is.
| Provision | Exact rule | Section |
|---|---|---|
| Who owns the deposit | Stays the tenant’s money, held in trust, not mixed with the landlord’s funds | GOL 7-103(1) |
| Bank notice | Written notice with the bank’s name, address, and the deposit amount | GOL 7-103(2) |
| Landlord’s fee | 1% per year of the deposit, instead of all other admin costs | GOL 7-103(2) |
| Interest account required | Buildings with 6 or more family dwelling units | GOL 7-103(2-a) |
| Interest rate | The prevailing rate for similar deposits in the area (no fixed number) | GOL 7-103(2-a) |
| Lease ends mid-cycle | Landlord pays the interest it can collect as of the termination date | GOL 7-103(2-b) |
| Waivers | Any lease clause waiving these rights is “absolutely void” | GOL 7-103(3) |
You can read the full text of General Obligations Law section 7-103 on the New York State Senate website.
Who Security Deposit Interest NYC Covers (and Who It Does Not)
The trust rule covers almost every renter. Section 7-103(1) applies to any money deposited “for the use or rental of real property.” That means your deposit is protected money whether you rent in a large tower or a small house.
The interest requirement is narrower. Security deposit interest nyc only forces the landlord to use an interest-bearing account when the building has six or more family dwelling units. For example, if you rent in a 20-unit building, the landlord must use one. If you rent in a two-family house, they typically do not have to.
However, a small-building landlord may still choose an interest-bearing account. If they do, the same split applies. They keep 1% per year, and the rest is yours. So even outside the six-unit rule, security deposit interest nyc protections can still reach you. If you are unsure how many units your building has, ask your landlord in writing.
Rent-stabilized tenants should also look at section 7-107, which covers deposits in rent-stabilized units. Its exact terms are not covered here, so confirm them in the statute itself or with a legal-aid office.
What Your Landlord Must Do Under This Law
Your landlord has clear duties. They must put the deposit in a New York bank and tell you in writing where it is. They must not mix it with their own money. In a six-plus unit building, the account must earn interest. Then they must either pay you the interest every year or hold it in trust until the deposit is returned or applied.
A companion law, General Obligations Law section 7-108, adds more rules. In most cases, the deposit cannot be more than one month’s rent. It lists some exceptions, such as rent-controlled units and certain senior and care communities. The landlord also cannot keep money for normal wear and tear or damage a prior tenant caused. Security deposit interest nyc works alongside these limits.
When the building is sold, your rights do not disappear. Under section 7-108(2), a new owner can be liable for your deposit “plus accrued interest” if they know about it. Security deposit interest nyc money travels with the deposit. That is why keeping your bank notice and lease matters so much.
What You Can Do When It Is Broken
Start with a calm written request. Ask your landlord for the bank name, the account balance, and the interest earned. Cite section 7-103 and keep a copy. In most cases, a clear letter gets a response. For example, you might write: “Please confirm where my deposit is held and pay the interest owed under GOL 7-103.”
If that fails, you may be able to take it to court. Under section 7-108(1-a)(f), the landlord must prove that any amount kept was reasonable. A landlord who breaks those rules is liable for your actual damages. If a court finds the violation was willful, punitive damages can reach up to twice the amount of the deposit. Results are never guaranteed. Filing limits and fees vary, so confirm them with your local court.
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The New York Attorney General can also go to court to force compliance under section 7-109. You can report security deposit interest nyc problems to that office. If you are facing an eviction, or the landlord is using your deposit against you, contact a local legal-aid office or tenant attorney right away. Many tenants in New York can get free help.
Frequently Asked Questions
How much interest should I get on my deposit?
The law does not set a fixed rate. The account must earn the prevailing rate for similar deposits at banks in your area, and the landlord may keep 1% per year. Your bank notice and account records show the real number under security deposit interest nyc rules.
Can my lease say I give up my right to interest?
No. Section 7-103(3) says any lease clause waiving these rights is “absolutely void.” Even if you signed it, security deposit interest nyc protections still apply to you.
I moved out mid-year. Do I lose the interest?
No. Under section 7-103(2-b), the landlord must pay you the interest it can collect as of the date your lease ends. Ask for it in writing along with your deposit.
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Sources & How to Verify
The rules on this page are drawn from official government and legal-aid sources. Tenant law changes, so always confirm the exact rule with your state’s statute or a local legal-aid office.
- HUD: hud.gov — federal renter protections and fair housing
- Legal Services Corporation: lsc.gov — find free legal aid in your state
- Cornell Legal Information Institute: law.cornell.edu/wex — plain-English legal definitions
- Your state statute & court self-help portal: search “[your state] landlord tenant act” and “[your state] court self-help eviction” for the exact law and forms
Content last reviewed September 2026. If you notice outdated information, please contact us.
New York Renter Guides
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- Breaking a Lease in New York
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Informational only — not legal advice. Tenant Rights Info is an independent educational resource, not a law firm, and this page does not provide legal advice. Landlord-tenant law varies by state and city and changes over time, so always verify the exact rule with your state’s statute, your local court’s self-help portal, or a legal-aid office. For urgent situations like an active eviction, contact a local legal-aid office or a licensed tenant attorney in your state right away.