New Rent Laws: Tenants May Be Able to Recover Damages for Excessive Security Deposits
In last month’s issue of this Client Advisory, we reported on several provisions of the Housing Stability and Tenant Protection Act of 2019 that, in addition to affecting residential rentals, also are drafted so as to appear applicable to cooperatives. One of these provisions amended General Obligations Law § 7-108 to limit the amount of any security “deposit or advance” to one month’s rent. In addition to limiting the amounts of traditional security deposits, this provision may also be interpreted to limit the amount that tenant-shareholders are required to deposit under maintenance escrow agreements and alteration agreements. It should be noted that § 7-108 provides that “any person” who violates the statute “shall be liable for actual damages” and that if the person is found to have “willfully violated” the law, the person “shall be liable for punitive damages of up to twice the amount of the deposit or advance.” Cooperative boards and landlords facing issues under this or other provisions of the new law should consult with their counsel regarding their obligations as well as possible alternative means of meeting their objectives without violating the law.