Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.
What about security deposits? Well, security is there for the landlord to recoup their money when there’s damages to the property, but it’s one of the most misused things out there. In New York, if you have security, you’re supposed to keep it in a segregated account, no questions asked from the minute you get it until the minute you give it back to the tenant. If you don’t, then the tenant wants to go after you for it, the damages are the amount of the security.
This is a problem because I know a lot of landlords, they basically use their security as operating income and this can arise at any time. It all, usually arises when there’s an eviction happening and they want to fight it and they’ll counter claim for an accounting on the security and then you’ve got a problem. It’s particularly a problem if you’re buying a property and there’s tenants already in it and prior landlord held security because now you’re subject to whatever the prior landlord did. So if they at any point commingled the security, you got a problem.
Now when we say “segregated account,” we mean segregated, or separate from your rents. So you’re holding it as security and you are considered the trustee of the security and if you’re a trustee of anything, you keep it separate from your own stuff.
I am often asked, “Can I put the security in a savings account?” Sure. You can put in a savings account, you can put it in any kind of account you want, as long as the money is there, when the tenant ever asked for it, not that they’re entitled to it but they could just say, “Hey, is my money there, give me notice and I want to know where it’s been since I gave it to you”. You got to give it to them.
The rule is the security cannot be the same account that where the rent goes.
Above is the full video transcript of following video:
About the Presentation by Mr. James Clark
The above is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”
Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.
In this clip, Mr. Clark discussed the practical and legal considerations relating to security deposits landlords should be aware of for their Long Island residential rental.
To view the full presentation, click here.
During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:
- How to hold title to a rental property
- How do I know if it’s a good rental property?
- Marketing Strategies For Your Rental Property
- Applications and Tenant Background Checks
- Anti-Discrimination Laws Effecting Long Island Residential Rentals
- What About Lease Agreements
- How About Security Deposits
- Collecting Rent
- What To Do When a Tenant Doesn’t Pay
- The Landlord Mindset
East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.
For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.