SUCCESSION: Interest payments on security deposit

[ggmama]

Hello,
After a long battle in housing court my brother was awarded Rights to Succession for my rent stabilized apartment. It took about a year after the housing court judgment for the landlord to come through and actually give him a lease in his name. When the renewal lease took place the LL required that we transfer the security deposit to my brother, as opposed to refunding it to me, and then receiving a new deposit from my brother. This sounded okay so we did it this way.

I lived in that apartment since 1995 and the landlord has held my security deposit the whole time. For the first couple of years of my lease, the landlord would send annual statements about the security deposit and the interest that it had accrued that given year. He stopped sending such statements about 1999. I never really thought about it until now.

It's written in my lease, this deposit was supposed to be held in a separate account and accrue interest. The landlord is required to refund this interest (minus 1% for admin costs) to me when I vacate.

So my question is this... How can I get my landlord to refund the interest that has been accumulating over the past 16 years? I estimate the current total to be something around $500-750 in total. I have moved out completely and transferred the security to my brother's new lease. The LL is a shifty guy and never returns security deposits, let alone interest on them, so I know if we don't act now, we will never see any of that money.

How can I demand this interest from him? Is there a time limit within which he needs to refund the interest amount? And if he refuses-which I think he will--what recourse do I have?

Basically, I don't want him to claim that we must wait until my brother moves out to receive said interest. This will never happen. And it bothers me that he gets to keep this money--this guy is a compete lying cheating scammer who harassed me and my family for over 3 years.

I know it's a bit complicated, so if I left out any important details, please let me know.
Thanks in advance.
g

[TenantNet]

You're correct on the deposit issues. Look at the Reference section of the Forum for information on Security Deposits. Owners are required (for RS units) to keep the funds in a trust account. Accrued interest, minus 1% administrative fee, is payable to the tenant yearly or when the tenant vacates. The NYS General Obligations Law requires the "balance" of the account after the fee is payable to the tenant. That includes all interest and compounding, less the fee and less any legitimate deductions for damages.

It appears to be a more common scam than I initially thought that owners try to skim from the top the interest, including claims that the interest was not compounded. The statements you initially got are a starting point. The owner is required to tell you the name of the bank the account is being held. You can find out from the bank the rates of interest it paid, for what periods that rate was paid, and what is the compounding they pay.

You can ask the LL for additional statements, but I suspect they won't give them to you. But you can still build a case of what you think the remaining interest should be.

Interest rates prior to 1990 were much higher, usually around 5%. These days they hover around 1% so don't expect too much. But even if it's small, it's yours. If the existing account was transferred to your brother, then this is complicated in that the account is no longer yours. Was the entire account transferred to his name, or a specific dollar amount? You'll need to sort that out first as to who might have legal standing to bring a case and in which forum.

I suspect the Attorney General's office won't be interested in these scams, although they are the office that should be watching this. Let us know if you have any success with the AG.

You can also seek the money in Small Claims Court.

[ggmama]

Thanks so much for your reply! This is great info, I will follow up with the LL and ask about my current interest amount. Although I highly doubt they will give me any info. Is this something that would fall under DHCR/rent overcharge jurisdiction? Or is it only the Atty Gen that handles these matters. I really don't know where to start to try to get this money back, and am sure they will pull something fishy when the time comes for my brother to vacate. How does one go about contacting the AG? I have never done this before. If you have any suggestions on the best method to try to get this money back, I would love to hear.
Thanks again,
Grace

PS on a different note, the LL still has not returned a copy of my brother's new lease--going on 2 months now. I believe he had 30 days and has missed that deadline. Is there something we can do about this as well.

[Landlord's Boy]

The "scam" from the banks nowadays is to pay exactly 1% interest on SD accounts. That way all interest goes to the landlord and nothing is compounded. This makes accounting very easy.

For SD accounts that do pay over 1% (not many) or banks usually pay the tenant interest minus 1% directly 1-4 times a year so interest still doesn't compound year-over-year: every now and then tenants will call me up, asking why did they receive a check for fifteen cents? This is why.

If your LL actually keeps your SD in a separate account that is not a specialty SD account you may still be disappointed: in the past few years these have paid LESS than 1% so you actually may have to pony up money to make up the difference after the LL skim.

[TenantNet]

Back in the day interest was around 5 - 5.25%. Not so now. The 1% deduction provision was written back then, but not likely to be changed any time soon.

The AG's office won't deal with interest issues unless the tenant has vacated. DHCR does not deal with SD issues generally, although they have done so in some instances. There is a provision in the RSC that owners can collect up to one month's rent as SD, but some at DHCR see that as an upper limit, and does not require tenants pay one month.

Another avenue is small claims court.

The General Obligations Law - section 7-103 - requires LLs to tell tenants in writing how much money is in the account and provide the name and address of the bank, and that the "balance" of the account after the 1% deduction is payable to the tenant.