Preserving Profits: Navigating Damaged Units and Security Deposits

Whether you’re the owner of a single building with six or more dwelling units in Queens, or a property manager with more than 10,000 units across the five boroughs, a simple email could save you thousands—or hundreds of thousands—of dollars in out-of-pocket repair costs and attorney’s fees.  

What steps must a landlord take when a unit has been damaged by a tenant?  You might respond with, well, the lease provides I can apply the security deposit to cover the cost of repairs, right?  Can’t I just send the tenant an itemized statement detailing the repairs and return the difference?  

Not so fast.  The New York County Civil Court’s recent decision in Solda v KJL Ventures LLC provides a cautionary tale for landlords dealing with damaged units and security deposits. 

Section 7-108 of the General Obligations Law provides that:

“within a reasonable time after notification of either party’s intention to terminate the tenancy, unless the tenant terminates the tenancy within less than two weeks’ notice, the landlord shall notify the tenant in writing of the tenant’s right to request an inspection before vacating the premises and of the tenant’s right to be present at the inspection.”

The statute also provides that “if the tenant requests such an inspection, the inspection shall be made no earlier than two weeks and no later than one week before the end of the tenancy.”

GOL §7-108 further requires landlords to provide at least 48 hours written notice of the date and time of the inspection and after the inspection has taken place, the landlord must provide the tenant with an itemized statement specifying any required repairs or cleaning that the landlord intends to deduct from the tenant’s security deposit.  Importantly, the tenant must have an opportunity to cure any such condition before the end of the tenancy.

Sounds simple enough, right?  Well, let’s address the Court’s recent decision in Solida, where the Court ordered the landlord to remit payment of the full value of the security deposit to the tenants. 

In Solida, the lease at issue was entered into in June 2017 and expired in June 2022.  However, the tenants continued to occupy the unit after the lease expiration and made monthly rent payments, which the landlord accepted. 

The landlord’s acceptance of rent started a new, month-to-month tenancy.  This new tenancy was created after the new terms of GOL §7-108 took effect on July 30, 2019.  Because a new tenancy was created after July 30, 2019, the tenancy in Solida became subject to GOL §7-108.

In Solida, the tenants sent an email to an agent of the landlord on October 15, 2022 informing the landlord that they were vacating the premises on November 15, 2022.  The landlord in Solida responded only by saying, “Thank you for providing us with the move out date of November 15. . . Please let us know when you will be moving out on November 15, so we can set up an inspection immediately thereafter.” 

Because the tenants provided the landlord with at least two weeks’ notice, the landlord was required to notify the tenant, in writing, of the tenants’ right to request an inspection before vacating the premises and of the tenant’s right to be present during the inspection.  The Court held that the landlord’s email did not sufficiently provide the tenants with the notice required by GOL §7-108.

Property owners: If a tenant has caused damage to your unit and has notified you of their intention to vacate at least two weeks in advance of the move-out date, you must explicitly notify the tenant—in writing—that the tenant has the right to request an inspection before vacating the premises and that the tenant has the right to be present at the inspection.  Absent such explicit notice to the tenant, any necessary repairs may come out of your pockets, and the full amount of the security deposit may be remitted to the tenant.

Here’s a sample of that simple email I referenced earlier:

“Thank you for advising us of your move-out date of (insert date here). Please be advised that you have the right to request an inspection before you vacate the premises and that you have the right to be present during the inspection. We are available to conduct an inspection of the premises on . Please let us know at your earliest convenience if this time works with your schedule, and if not, please propose a new date and time for the inspection.”