BILL NUMBER: S4581

SPONSOR: SKOUFIS
 
TITLE OF BILL:

An act to amend the general obligations law, in relation to extending
the timeline for the return of security deposits for residential rental
agreements from fourteen days to thirty days

 
PURPOSE:

This legislation extends the timeline for the return of security depos-
its for residential rental agreements from fourteen days to thirty days
to accommodate the circumstances of small property owners and local
financial institutions.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends paragraph (e) of subdivision 1-a of section 7-108 of
the General Obligations Law to amend the timeline for the return of
security deposits for residential rental agreements from fourteen to
thirty days.
              

Section 2 sets the effective date.

 
JUSTIFICATION:

As part of the passage of the Housing Stability and Tenant Protection
Act of 2019, several pew requirements were put into plate governing the
amount of security deposits, the allowed usage. of security deposits,
and the opportunity for a tenant to inspect the rental property after
moving out, and the timeline under which a landlord must either refund
the security deposit or provide an itemized statement to the tenant
indicating a portion of the security deposit being kept by the landlord
and the reasons for withholding the remaining amount. That itemized
statement must include deductions for cleaning, repairs, back rent, or
other financial obligations required under your lease or rental agree-
ment. Regarding the repairs, landlords are also encouraged to provide
the tenant with the exact cost or a reasonable cost estimate of the
repairs, which must be greater than a threshold of "normal wear and
tear."

These new requirements provide valuable tenant protections and establish
a clear understanding for landlords and tenants alike than was provided
by previous law. However, the 14-day deadline for either returning a
security deposit or an itemized list of deductions can be challenging
for small property owners and operations.

The itemized list of deductions should include a reasonable cost esti-
mate for repairs, which requires landlords to have contacted, scheduled,
and received an estimate from a reputable and licensed contractor or
repair service, which can be difficult to schedule during peak times or
over holidays. Licensed contractors, in particular, may take days to be
able to inspect the damage and an additional few days to deliver a prop-
er estimate, quickly taking up most of the 14 days. To give one example,
mold remediation will occasionally be necessary to restore an apartment
whose previous tenant had inflicted above average damage over a
prolonged period of time in a bathroom or a kitchen which may not be
discoverable until the pre-or post-move out inspection. In the months
after Hurricane Ida struck the region, the waiting list for appointments
from mold remediation specialists for an initial estimate took weeks in
some regions.

Many smaller or family-operated landlords often have long-standing
relationships with community-based banks rather than statewide or
national chains. Such financial institutions provide institutional memo-
ry, personal and longstanding relationships, and local community ties
but do not always have the hours of operation, turnaround time, or
options for banking provided by chains, requiring extra time and often
in-person interactions to remit a security deposit out of escrow
accounts and other financial tools, particularly in suburban and rural
communities. This becomes particularly difficult when the security
deposit must be transferred from an escrow or interest-bearing account
and into an operating account before ,a check can be written.

Thirty-nine states and the District of Columbia establish a deadline for
returning security deposits longer than the 14-days under current New
York State law, with the most common timeline being thirty days.  A
one-monthò timeline would provide added flexibility to small property
owners and those dealing with unusual circumstances or chance accidents
of the calendar that would allow for a reasonable exchange between land-
lords and tenants.

 
LEGISLATIVE HISTORY:

Senate

New Bill. Assembly

2022: A3278, Referred to Judiciary

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.