A security deposit MUST be in an escrow account, period. A landlord is allowed to ask for pre-paid rent, up to the entire year, which does not have to go into the same account as security. The only exception is a rent stabilized apartment, which legally can only ask 1 moth rent and 1 month security. Just make sure the lease states that the last 5 months are pre-paid. That way, if something happens to the apartment or building, you get your rent back. As far as breaking the lease. the moment you sign it (and it's countersigned by the owner) you are legally responsible for the entire lease, so unless you get a new tenant to take over, or get a new lease (which most landlords will do) you're responsible until you do.
Disclaimer: I'm not an attorney, but my knowledge comes from 22 years experience doing Manhattan sales and rentals, as well as 18 years of being a landlord in Manhattan and Long Island.... more