Does My Landlord Owe Me Interest?
Almost every lease requires the tenant to provide a security deposit. But whether the tenant will earn any interest on that deposit depends on the type of rental, as well as the specific terms of the lease.
A security deposit is money a tenant leaves with a property owner for the repair of possible future damage.
In New York State, the law requires owners of multi-family residential buildings with six units or more to place security deposits in interest-bearing bank accounts.
?But what is the law regarding security deposits in commercial buildings, when space is leased for a store, pharmacy, laundromat or other small business?? asked Francisco J. Castillo, who leases commercial space in Brooklyn.
There are significant differences in the regulation of security deposits for residential and commercial leases. The terms of the rental agreement generally governs commercial security deposits, explained real estate attorney Robert Finkelstein.
Unlike apartments, there is no legal requirement in NYS to place security deposits for commercial leases in interest-bearing accounts.
The law only restricts the property owner from commingling security deposits with other funds. The property owner is supposed to keep the security deposits separate.
If he decides to deposit the money in a bank, the bank must have a place of business in New York and the tenant must be given written notification. If the money deposited earns interest, the property owner is obligated to give almost all of it to the tenant. By law, landlords can keep an annual administrative fee of one percent of the security deposit.
When commercial property is sold, the owner is required to transfer the security deposits to the new owner and notify the tenants of the transfer within five days, Finkelstein said, ?Failure to transfer or notify the tenants of the transfer may constitutes a misdemeanor,? he added.