Changes in the Law Archives • The Law Office of Richard A. Klass, Esq.

She rented a Hamptons house for the summer. At the time of entering into the lease with the landlord, she paid $12,000 for the security deposit required under the lease.[1]

Failure to return the security deposit

At the end of the summer, the tenant requested the return of her security deposit. The landlord failed to comply with the lease and return the money. The landlord never provided the tenant with an itemized statement alleging any basis to retain any portion of the money. The tenant retained Richard A. Klass, Esq., Your Court Street Lawyer, to sue the landlord, claiming she was liable to Plaintiff for the amount of the security deposit with interest from the date the tenant vacated the premises.

NYS Security Deposit Law

On June 14, 2019, the New York State Legislature enacted the Housing Stability and Tenant Protection Act of 2019 (HSTPA), which made widespread changes to various laws affecting tenants’ rights. One of the major changes made under the HSTPA was to strengthen the rent security deposit laws. General Obligations Law § 7-108 provides that, within 14 days after a tenant has vacated the premises, the landlord has to provide the tenant with an itemized statement indicating the basis for the amount of the deposit retained, if any, and return any remaining portion of the deposit to the tenant. If the landlord fails to provide the itemized statement and deposit within 14 days, then the landlord forfeits any right to retain a portion of the security deposit.[2]

Motion for Summary Judgment

Once discovery proceedings were completed and both parties exchanged documentation concerning the claim, the tenant moved for summary judgment. It was urged that summary judgment be granted in favor of the tenant against the landlord for the full return of her security deposit. According to the tenant’s affidavit, at the end of the lease term and after she vacated the premises, the landlord failed to return her security deposit despite her repeated demands.

Summary judgment is proper when there are no issues of triable fact (Alvarez v. Prospect Hospital, 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986]). Issue finding rather than issue determination is its function (Sillman v. Twentieth Century–Fox Film Corp., 3 N.Y.2d 395, 165 N.Y.S.2d 498, 144 N.E.2d 387 [1957]). The evidence will be construed in the light most favorable to the one moved against (Weiss v. Garfield, 21 A.D.2d 156, 249 N.Y.S.2d 458 [3rd Dept.1964]). “Where the court entertains any doubt as to whether a triable issue of fact exists, summary judgment should be denied.” (Daliendo v. Johnson, 147 A.D.2d 312, 543 N.Y.S.2d 987 [2d Dept.1989]). To prevail on a summary judgment motion, the moving party must produce evidentiary proof in admissible form sufficient to warrant the direction of summary judgment in his or her favor (GTF Mktg., Inc. v. Colonial Aluminum Sales, Inc., 66 N.Y.2d 965, 967, 498 N.Y.S.2d 786, 489 N.E.2d 755 [1985]). Once this burden is met, the burden shifts to the opposing party to submit proof in admissible form sufficient to create a question of fact requiring a trial (Kosson v. Algaze, 84 N.Y.2d 1019, 622 N.Y.S.2d 674, 646 N.E.2d 1101 [1995]).

Landlord failed to provide any proof

It was incumbent on the landlord to put forward in opposition to the motion her evidence in admissible form in order to raise an issue of fact. She has failed to do so. As held by the NYS Court of Appeals in Zuckerman v City of New York, 49 NY2d 557, 562 [1980], “We have repeatedly held that one opposing a motion for summary judgment must produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact on which he rests his claim or must demonstrate acceptable excuse for his failure to meet the requirement of tender in admissible form.”

In her affidavit the landlord made the unsupported allegation that the tenant was notified of all damage “with [sic]” 14 days of the lease termination. However, she did not provide proof of compliance with General Obligations Law § 7-108(1-a)(e). There was NO itemized statement as required by statute (“the landlord shall provide the tenant with an itemized statement indicating the basis for the amount of the deposit retained, if any, and shall return any remaining portion of the deposit to the tenant.”). The email exchanges produced by the landlord in opposition did not indicate why certain areas and items needed to be cleaned or even whether items needed to be cleaned due to damage resulting from the tenancy or just being dirty from normal wear and tear. It was pointed out that General Obligations Law § 7-108(1-a)(f) provides: “In any action or proceeding disputing the amount of any amount of the deposit retained, the landlord shall bear the burden of proof as to the reasonableness of the amount retained.”

Summary Judgment Granted

In granting the tenant’s motion for summary judgment, the judge determined that the landlord “failed to proffer evidence to sufficiently rebut the plaintiff’s prima facie case. The emails nor the itemized invoices submitted indicated the basis for retaining the security deposit.” The judge granted judgment directing that the landlord pay the tenant back her $12,000 security deposit.

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Endnotes

[1] 3 (a) SECURITY DEPOSIT: Upon signing this lease agreement, Tenant shall pay the amount of $12,000 to the order of Landlord by bank/cashier’s check drawn on a U.S. bank or by electronic wire transfer, to be held as security by Landlord in a segregated account, as required by law. The security deposit may not be used as payment of rent. It is expressly understood and agreed that Tenant’s liability to perform the terms of this lease is in no way limited to the amount of the security deposit. Within fourteen (14) days after the tenant has vacated the premises, Landlord shall provide Tenant with an itemized statement indicating the basis for the amount of any deposit retained and shall return any remaining portion of the deposit to the Tenant.

[2] General Obligations Law § 7-108 provides, in relevant part:

This section shall apply to all dwelling units in residential premises, unless such dwelling unit is specifically referred to in section 7-107 of this title.

1-a. Except in dwelling units subject to the city rent and rehabilitation law or the emergency housing rent control law, continuing care retirement communities licensed pursuant to article forty-six or forty-six-A of the public health law, assisted living providers licensed pursuant to article forty-six-B of the public health law, adult care facilities licensed pursuant to article seven of the social services law, senior residential communities that have submitted an offering plan to the attorney general, or not-for-profit independent retirement communities that offer personal emergency response, housekeeping, transportation and meals to their residents:

(a) No deposit or advance shall exceed the amount of one month’s rent, unless the deposit or advance is for a seasonal use dwelling unit as provided for in subdivisions four and five of this section, or unless the deposit or advance is for an owner-occupied cooperative apartment as provided for in subdivision six of this section.

(b) The entire amount of the deposit or advance shall be refundable to the tenant upon the tenant’s vacating of the premises except for an amount lawfully retained for the reasonable and itemized costs due to non-payment of rent, damage caused by the tenant beyond normal wear and tear, non-payment of utility charges payable directly to the landlord under the terms of the lease or tenancy, and moving and storage of the tenant’s belongings. The landlord may not retain any amount of the deposit for costs relating to ordinary wear and tear of occupancy or damage caused by a prior tenant.

(c) After initial lease signing but before the tenant begins occupancy, the landlord shall offer the tenant the opportunity to inspect the premises with the landlord or the landlord’s agent to determine the condition of the property. If the tenant requests such inspection, the parties shall execute a written agreement before the tenant begins occupancy of the unit attesting to the condition of the property and specifically noting any existing defects or damages. Upon the tenant’s vacating of the premises, the landlord may not retain any amount of the deposit or advance due to any condition, defect, or damage noted in such agreement. The agreement shall be admissible as evidence of the condition of the premises at the beginning of occupancy only in proceedings related to the return or amount of the security deposit.

(d) Within a reasonable time after notification of either party’s intention to terminate the tenancy, unless the tenant terminates the tenancy with 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. 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. The landlord shall provide at least forty-eight hours written notice of the date and time of the inspection. After the inspection, the landlord shall provide the tenant with an itemized statement specifying repairs or cleaning that are proposed to be the basis of any deductions from the tenant’s deposit. The tenant shall have the opportunity to cure any such condition before the end of the tenancy. Any statement produced pursuant to this paragraph shall only be admissible in proceedings related to the return or amount of the security deposit.

(e) Within fourteen days after the tenant has vacated the premises, the landlord shall provide the tenant with an itemized statement indicating the basis for the amount of the deposit retained, if any, and shall return any remaining portion of the deposit to the tenant. If a landlord fails to provide the tenant with the statement and deposit within fourteen days, the landlord shall forfeit any right to retain any portion of the deposit.

(f) In any action or proceeding disputing the amount of any amount of the deposit retained, the landlord shall bear the burden of proof as to the reasonableness of the amount retained.

(g) Any person who violates the provisions of this subdivision shall be liable for actual damages, provided a person found to have willfully violated this subdivision shall be liable for punitive damages of up to twice the amount of the deposit or advance.

Richard A. Klass, Esq.
Your Court Street Lawyer

#CourtStreetLawyer #security-deposit

Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn, New York. He may be reached at (718) COURT●ST or RichKlass@courtstreetlaw.comcreate new email with any questions.

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He got the Summons and Complaint from a process server in 2007. The name of the plaintiff suing the defendant was “New Century Financial.” He had never heard of the plaintiff and did not know why it was suing him. The Complaint claimed that the defendant had a Providian credit card account and owed money on the account. He remembered having an account with Providian a long time ago and also remembered making his last payment to Providian in the Fall of 2000. Many people still remember the fall-out of the Savings and Loan crisis in the 1980s, and the take-over of bank assets by the FDIC and RTC, including hard assets (such as buildings) and monetary instruments (such as promissory notes); those assets were sold to third party investors and collected upon by them. In the 1990s, an offshoot of that industry began in full force – the purchase of credit card charge-offs, auto loan deficiencies and other debts owed by consumers. Debt brokers began buying nationwide and statewide portfolios of debt, and selling them to debt buyers in every imaginable stratification. When the defendant in this case got sued by New Century Financial, he turned to Richard A. Klass, Your Court Street Lawyer, for legal assistance to defend himself against this debt buyer’s claims.

Statute of Limitations:

In almost every type of case that a person may bring against someone, there is a time in which that case may be brought, and once that time has passed, the “ statute of limitations ” for that type of case prohibits a late case from being brought. There are various reasons for this rule, including failing memories, loss of evidence, and fairness to litigants. According to New York State law, in Civil Practice Law and Rules (CPLR) Section 213(2), the statute of limitations to sue someone for breaching a contract is six years from the date of breach. In this case, one of the defenses put forth by the defendant was that his last payment to Providian was made in the year 2000, and the lawsuit was filed by New Century Financial in the year 2007; seemingly, the six-year statute of limitations period in which to bring the case had already passed. Since the defendant did not have records of all of his payments to Providian, there was an issue as to whether the last payment was, in fact, made in the year 2000.

Who are you and why are you suing me?!

More importantly, a much more compelling defense was asserted by the defendant that New Century Financial lacked “standing” to bring the case. The defendant admitted that he may have previously owed a balance on his credit card bill due to Providian; he even saved some of the old dunning letters that he received from Providian. But why was someone he never heard of before suing him for that balance. In addition to the statute of limitations, there is another fundamental of law, the issue of standing. When someone brings a lawsuit against another, he has to prove that he may legally do so; in other words, that he owns the claim he is bringing. One of the common problems in these so-called “debt buyer” cases is that the plaintiff cannot prove that it is the rightful owner of the debt allegedly owed by the defendant.

The defendant took a very simple legal position – if Providian showed up to collect its debt, it may be due; but, the plaintiff cannot show it owns the debt. This called into question an evidentiary issue as to whether New Century Financial could prove the chain of title from Providian to itself. After pressing for disclosure of the purchase agreements and other evidence of the alleged assignment of the credit card account from Providian to New Century Financial, the debt buyer finally capitulated. New Century Financial agreed to discontinue the lawsuit WITH PREJUDICE (meaning that it cannot bring the lawsuit against the defendant again in the future).

Changes developing in the law:

Across the country, various governmental agencies have been busy trying to address the problems encountered between debt buyers and consumers. The federal Fair Debt Collection Practices Act (FDCPA) prohibits many forms of harassment and abuse by debt collectors who collect debts owed by consumers to creditors. In recent years, the FDCPA has redefined the term “debt collector” to include “debt buyers” to curb their abuses. The New York City Administrative Code, which requires the licensing of debt collection agencies with the Department of Consumer Affairs, was amended to include debt buyers.

By the directives of the Chief Clerk on May 13, 2009, new requirements came into action in the New York City Civil Court system to directly address two common problems with debt buyer cases. The first one is that, when a plaintiff applies to the clerk for entry of a default judgment against the defendant, the papers must include an affidavit from the plaintiff or its attorney that it has “reason to believe that the statute of limitations has not expired.” The second one is that, when a plaintiff applies to the clerk for entry of a default judgment against the defendant, the papers must include (a) an affidavit of sale from the original creditor and not an agent; (b) an affidavit from any intermediaries who owned the debt before assignment to the plaintiff; and (c) an affidavit from the plaintiff attesting to the chain of title from the original creditor to it.Without doubt, the changes being put into effect, coupled with the difficulties of debt buyers in obtaining documents and witnesses from the original creditor, will tilt the scales of justice towards consumers for some time.

by Richard A. Klass, Esq.

©2009 Richard A. Klass. Art credits: page one, Porträt eines Mannes mit Hellebarde (4th quarter of the 17th century). Artist: Aert de Gelder. Marketing by The Innovation Works, Inc.
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copyr. 2011 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

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