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Attorney General Proposes Security Deposit Reform

Posted by Mark Smith on May 10, 2000 at 07:44:57:

From the New York Daily News, Wednesday, May 10, 2000:

Bill Would Peak Interest From Security Deposits
by Joe Mahoney

Attorney General Eliot Spitzer proposed legislation yesterday to give tenants a better return on interest from security deposit accounts that landlords set up with banks.

Too often, tenants who live in multiple-dwelling buildings are shortchanged on interest to the benefit of banks and landlords, Spitzer charged.

Many banks pay 1.1% on security deposit accounts, and current law allows landlords to retain a 1% fee so the tenants in those instances would only receive one-tenth of 1% interest, he said.

Spitzer said his bill would provide an incentive to landlords to find higher-interest accounts by setting the landlord fee at 20% of the interest earned and giving the tenants the other 80%.

"We want to use the markets to maximize the return to tenants," Spitzer said.

The measure, sponsored by Assemblywoman Helene Weinstein (D-Brooklyn) and state Sen. Frank Padavan (R-Queens) is backed by the Brooklyn Tenants Council.

An estimated $1.3 billion sits in tenant security accounts from security deposits for about 2.2 million tenants statewide, Spitzer said.

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