Sublease agreement for sublet needed?

It is illegal for a landlord to not put a security deposit into a separate account. I assume the same should be true for a sublease. That money is not there for use by the holder of the deposit, it is being held in trust for the depositee. If the holder commingles the deposit with their own funds, civil courts have regularly called this conversion (the civil equivalent of theft). So, such an arrangement is unusual / illegal. There is nothing you can sign that would change this (the law states that any contract waiving the holding of the security deposit separately is null and void).

Of course, there's probably a practical matter you are dealing with. The leaseholder has a $2000 deposit with the landlord in his name and is taking $1000 in lieu of depositing your $1000 with the landlord. I doubt the law cares about this predicament. Good news for you is this. If the money has not been held in trust, you can sue for its immediate return under conversion (and maybe get 9% legal interest) regardless of any and all damages to the apartment, unpaid rent, etc. The holder has to come after you separately for that after returning the deposit. The one waiver to this is if it's before the end of the lease, and the holder remedies the situation before you file suit.

So, if you document that the money is not being held separately in trust, you'll have an easier way to get it back if there is disagreement on damages. On the other hand, getting the money back will be easier if there is no dispute and it's being held in a separate account since this guy clearly has cash-flow issues.

Sounds to me like what you're doing isn't a true, legal sub-lease. You're moving into an apartment to replace a someone else's roommate who is moving out, right? I would document something between the two of you, but I'm guessing the landlord knows nothing about this and the other guy's name is the one on the actual lease?

The issue with the security deposit is that if you give him that money to re-pay the guy who's moving out, you have no legal claim to the actual deposit that is held by the landlord. It's either all your roommates or split with the guy who's moving out, depending who's actually on the lease.

This is pretty standard NYC stuff, just make sure you have a written agreement between you and your new roommate (you can call it a sublease if you want, though it's really not) and hopefully you trust the guy.

Best of luck!

Thanks much for your comments.

>assuming I dont destroy the place.

You mean "assuming I leave the place in the same condition in which I found it."

having been in this situation myself in the past, the bigger issue is that you're unlikely to receive the return of your "deposit" unless and until a new roommate can be found to fill your place.