Rental Basics in 11231>Question Details

agarzillo, Both Buyer and Seller in 11231

What is the security deposit interest rate in NYC?

Asked by agarzillo, 11231 Wed Jun 6, 2012

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There is no rate per say. The security deposit has to be held in an interest bearing account, which would be the standard AYP of the banking institution utilized by the owner.
2 votes Thank Flag Link Wed Jun 6, 2012
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2 votes Thank Flag Link Wed Jun 6, 2012
Thank you Barbara, I should have been more clear on that point.
1 vote Thank Flag Link Thu Jul 19, 2012
Property matchmaker is correct. It goes in the bank of the landlord's choice and interest for the past few years has been very low. The owner gives back yearly or credits the tenant with the interest yearly. If your the owner, make sure you document the interest return to tenants. Savings interest is now 1% or less at some banks.
1 vote Thank Flag Link Sat Jun 30, 2012
Down payments go into non-interest bearing escrow accounts.
1 vote Thank Flag Link Wed Jun 6, 2012
Interest is paid on security deposits only when the building contains 6 or more units. Even then, the landlord is permitted to take the equivalent of 1% interest each year as an administrative fee. With current interest rates on savings accounts hovering at or just below 1% I wouldn't count on earning any interest on a security deposit.

Landlords are entitled to collect annual administrative expenses of one percent of the deposit. All other interest earned on the deposits belongs to the tenants. Tenants must be given the option of having this interest paid to them annually, applied to rent, or paid at the end of the lease term. If the building has fewer than six apartments, a landlord who voluntarily places the security deposits in an interest bearing bank account must also follow these rules.

For example: A tenant pays a security deposit of $800. The landlord places the deposit in an interest bearing bank account paying 2.5%. At the end of the year the account will have earned interest of $20.00. The tenant is entitled to $12.00 and the landlord may retain $8.00, 1% of the deposit, as an administrative fee.
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1 vote Thank Flag Link Wed Jun 6, 2012
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