Albany, NY Rental Property Rules: Security Deposit Rules (2026)

Security deposits in Albany are not regulated by city ordinance, they are governed almost entirely by New York State law. The two controlling sections are General Obligations Law §7-103 (the trust-fund rule, in place since 1962) and §7-108 (the HSTPA 2019 reforms).

§7-108(1-a)(a), added by the Housing Stability and Tenant Protection Act of 2019 and effective June 14, 2019, caps the security deposit (or any advance) on a residential lease at one month's rent. The cap applies statewide, to both regulated and unregulated tenancies, with narrow exceptions for seasonal-use units and owner-occupied cooperative apartments. Anything collected in excess of one month's rent is recoverable by the tenant.

§7-103, unchanged in its core trust-fund obligation, requires every Albany landlord to hold the deposit in trust for the tenant. The money is not the landlord's; it cannot be commingled with personal funds, and on sale of the building the deposit must be transferred to the new owner. If the rental is in a building of six or more units, the deposit must be placed in a New York State bank account bearing the prevailing rate of interest. Within 30 days of receipt, the landlord must give the tenant written notice of the bank name, address, and account number. Interest accrues to the tenant (minus a 1% per year administrative fee the landlord may keep).

§7-108(1-a)(e) and (f) require the landlord to offer the tenant a pre-move-in inspection (to document conditions) and a pre-move-out inspection (to identify potential deductions). The deposit must be returned within 14 days after the tenant vacates, together with an itemized statement of any deductions. A landlord who fails to provide the statement or return the deposit within 14 days forfeits the right to keep any portion of the deposit, regardless of the actual damages.