Security deposit interest question...

Unless this is a building which you own and it contains 4 or more apartments, no interest on security deposits needs to be paid. Now if you want to pay interest, that is fine and a bonus to your subtenant.

Hi, csn, thanks for the reply. In this case, it is a co-op apartment on which I am a shareholder--I do not own any other units in the building. I've gotten a bit confused looking up the law in NY--it seems to suggest that even though I don't own multiple units I still owe a percentage of the interest to my tenant. So I'm a bit stumped...

give him/her the interest you cheap bastard

bram - not absolutely sure but I thought LL was allowed to keep 1% of the security deposit as an "administration" fee - and since banks aren't paying even that I think that you do not have to pay interest to the tenant.

ph41--yeah, I believe it is 1% per year of the total security deposit amount. In my case, that would $146. But then I've also heard a 'small' landlord such as myself is not required to return any interest.

Bramstar, for real? The original deposit was nearly $5000. If I assume that the deposit was two whole months, which is crazy, then the person over 3 years has spent $90K with you, and if it was one month, $180K. If the former, and that person trusted you with two months, or if the latter, and we are taking about a $180K relationship ... you are really worried about $326 of nickles and dimes? Relax. Return the full interest (hold the $30 if you must). And send a nice note along with the returned check. So then, if you ever need a reference as a landlord, or the tenant ever needs a reference from you, you'll both be in good graces with each other. And even if you don't care about that, you simply won't feel petty.

or, a better summary is to see what gcondo said.

splaken and gcondo, I agree with both of you, but the tenant is no better for taking the CO/smoke detector. I can't wait for the tenant to post here and ask how he/she can get back the $30 that was withheld from the deposit!

Don't pay the interest - as a landlord my mortgage requires me to keep the deposits in an account at the lending bank. The bank charges the 1% fee. So tenants get nothing back. I've received my interest part back once - the check was for 47 cents.
If the guy wants to take you to small claims court over pennies let him.

Sunday, just because he's "no better for taking the smoke/CO detector" doesn't mean he shouldn't have to pay for its replacement.

And to speak to the other comments--yes, the tenant did leave a two-month deposit; he later asked for and received a $600/month discount on his rent, so I've treated him very fairly. Plus, I am not withholding for large gashes to the walls and some other damage that could easily be demonstrated as above and beyond normal wear and tear. And yes, the tenant will be getting the majority of his interest back, less roughly 1% per year of the deposit amount.

charge the tenant for damages and taking things, etc, but the interest, lol... cheap bastard. :D