What's happening
This bill removes landlords' ability to keep 1% of security deposit interest as an administrative fee, giving all interest to tenants.
Why it matters
Increases financial returns for tenants. By removing the 1% administrative fee previously kept by landlords, tenants will now receive the full amount of interest earned on their security deposits, potentially resulting in more money back at the end of a lease.
Shifts administrative costs to landlords. Landlords can no longer offset the costs of managing security deposit accounts with interest from tenant funds, which may change how they handle administrative responsibilities or structure deposits.
Improves transparency and fairness. Ensuring all interest goes directly to tenants addresses concerns about fairness and could encourage better practices around the handling of tenant funds, potentially reducing disputes over security deposit returns.
Signals a tenant-friendly policy shift. This amendment is part of a broader trend to strengthen tenant rights in New York, which may affect landlord-tenant relationships and influence future legislative changes in housing policy.
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Who cares
Tenants with interest-bearing security deposits or advances
The bill would make all interest paid by the bank their money, rather than allowing a landlord to retain a portion for administration expenses.
Landlords holding security deposits or advances
The bill would eliminate their entitlement to retain one percent per year of the deposited amount as administration expenses.
Property managers handling security deposits
They would need to account for all bank-paid interest as tenant money, either held in trust until repaid or applied to rent, or paid to the tenant annually.
Headline styles
Let Tenants Keep Deposit Interest
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to judiciary
- Referred to judiciary
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2374
2017-2018 Regular Sessions
IN SENATE
January 13, 2017
Introduced by Sen. ALCANTARA -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary
AN ACT to amend the general obligations law, in relation to tenant security deposits
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The section heading and subdivision 2 of section 7-103 of the general obligations law, the section heading as amended by chapter 1009 of the laws of 1970 and subdivision 2 as amended by chapter 402 of the laws of 1979, are amended to read as follows:
Money deposited or advanced for use or rental of real property; waiver void[; administration expenses].
2. Whenever the person receiving money so deposited or advanced shall deposit such money in a banking organization, such person shall thereupon notify in writing each of the persons making such security deposit or advance, giving the name and address of the banking organization in which the deposit of security money is made, and the amount of such deposit. Deposits in a banking organization pursuant to the provisions of this subdivision shall be made in a banking organization having a place of business within the state. If the person depositing such security money in a banking organization shall deposit same in an interest bearing account,[ he shall be entitled to receive, as administration expenses, a sum equivalent to one per cent per annum upon the security money so deposited, which shall be in lieu of all other administrative and custodial expenses. The balance of] the interest paid by the banking organization shall be the money of the person making the deposit or advance and shall either be held in trust by the person with whom such deposit or advance shall be made, until repaid or applied for the use or rental of the leased premises, or annually paid to the person making the deposit of security money.
§ 2. This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD07007-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general obligations law, in relation to tenant security deposits
Purpose
Prohibits the collection of administration expenses by a landlord and provides for the tenant to collect all interest paid on a security deposit or advance.
Summary of provisions
Section 1 of the bill amends section 7-103 of the general obligations law to remove the ability of a landlord to collect administration expenses on a tenant's security deposit and allows for a tenant to collect on all interest paid on the security deposit.
Existing law
Currently a landlord is allowed to collect, as "administration expenses" a sum equivalent to one per cent per annum upon a tenant's security deposit.
Justification
It is unjust for a landlord to have the ability to take one percent of the interest compounded by a tenant's security deposit. The security deposit is the tenant's money. Therefore it is only just that the tenant be allowed to keep all of his or her interest from that deposit.
Legislative history
2007: S.3556(Duane),Died in Judiciary 2008: S.3556(Duane),Died in Judiciary 2009: S.3338(Duane),Died in Judiciary 2010: S.3338(Duane),Died in Judiciary
Fiscal implications
Minimal.
Effective date
This act will take effect on the first of January next succeeding the date on which it shall become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.