Interest on Security Deposit -- Clarification

[Laggs]

I've read in the FAQ on this site that if there are six or more apartments in my building, the
landlord must keep my security deposit in an interest-bearing bank account. My landlord thinks this is only the case if he is the landlord for 6 or more apartments (my apartment is in a multi-unit building, but it is the only apartment he owns).

I would assume this site is right, and the landlord is not, but if anyone can answer this definitely, I'd be very grateful. If anyone happens to know where this particular statute can be found (general obligations law?), that would also be great. Thanks for your help.

[mjr203]

I am not sure but think in the present economy is this moot?

the interest on a savings acct at the moment is 1% a year? But... "The owner may keep one percent of the deposit amount each year as an administrative fee." Isn't that a push?

Anyone know the deal?

[rentguy]

I've had to investigate this, too, and it seems your landlord is right. In order for you to claim interest on your security deposit, he must own and lease at least six apartments in the building.

I live in a multi-unit building, but my landlord only owns one apartment. I am not entitled to interest on my security deposit. I'm not sure of the exact reasoning behind this, but I would guess that, in all fairness, no one would expect a landlord to keep and maintain a separate bank account for only one security deposit.

[Laggs]

The plot thickens. I just spoke to a family friend who is a real estate lawyer in Manhattan, and he said the landlord is wrong, and that the trust account rules apply to my apartment. However, as this attorney is a friend of the family, he's giving me advice just as a favor and maybe I'm getting what I'm paying for!

As far as the relevance/mootness of interest in this day and age, I think that's fair enough if it were only for this past year, but he's had my deposit since 1997, and interest rates were much higher then. The attorney said that I should probably be looking at 3 to 3.5% as the average, so I deducted 2%, compounded annually.

So the jury is split I guess -- I'd love to know if anyone can point to the statutory authority for the whole interest/trust account issue.

[Laggs]

Ok, just as a follow-up, I checked one of those renter's rights d.i.y. law books, and it confirms what this site and the attorney said (not the landlord), so I'm pretty comfortable now. The statute supposedly is Gen. Obligations Law ss 7.03 et seq.

I think that *each* apartment's security deposit is meant to be kept in a separate account, i.e., they shouldn't be comingled with other renters' deposits or the landlord's personal funds.