Co-op Tenant's Escrow Account Is Security Deposit, Not Rent

December 1, 2007

LVT Number: #20039

Landlord cooperative corporation sued to evict shareholder tenant and sought to replenish tenant's escrow account. Tenant had deposited $30,000 into an escrow account to guarantee full compliance with his proprietary lease. When tenant stopped paying rent, landlord withdrew money from the escrow account to cover payment. Tenant consented to this. Landlord now claimed that tenant was required to deposit another $30,000 into the escrow account or face eviction. The court ruled against landlord. The escrow account was a security deposit; it wasn't rent.

Landlord cooperative corporation sued to evict shareholder tenant and sought to replenish tenant's escrow account. Tenant had deposited $30,000 into an escrow account to guarantee full compliance with his proprietary lease. When tenant stopped paying rent, landlord withdrew money from the escrow account to cover payment. Tenant consented to this. Landlord now claimed that tenant was required to deposit another $30,000 into the escrow account or face eviction. The court ruled against landlord. The escrow account was a security deposit; it wasn't rent. Landlord can't recover security deposit funds in a summary nonpayment proceeding. And the Civil Court doesn't have the authority to rule on security deposits.

930 Fifth Avenue Corp. v. Shearman: NYLJ, 11/28/07, p. 32, col. 1 (Civ. Ct. NY; Lebovits, J)

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