Landlord Must Refund Tenant's Security Deposit Without Any Damages for Willful Withholding

Former tenant sued landlord in small claims court, seeking return of her $4,803 security deposit plus damages. Tenant claimed that landlord willfully violated GOL Section 7-108(1-a)(e). After trial, the court awarded tenant $10,000, representing the security deposit plus damages. Damages could have been in the amount of twice the security deposit but for the small claims court's $10,000 recovery limit.

Landlord appealed and won, in part. Upon landlord's acceptance of tenant's rent for January through May 2020, the parties created a renewal tenancy and therefore the new security deposit provisions of the law enacted under HSTPA effective June 14, 2019, applied. So, the actual damages for withholding tenant's security deposit for more than 14 days after she moved out without an itemized statement of deductions required landlord to refund $4,803 plus an additional amount of $9,606 in punitive damages if landlord's action was found willful. However, the appeals court found that substantial justice between the parties wasn't afforded by the small claims court since the record didn't support a finding of willfulness. 

Case v. 575 Classon Ave, LLC: Index No. 2022-981 KC, 2024 NY Slip Op 50199(U)(App. T. 2 Dept.; 2/9/24; Toussaint, PJ, Buggs, Ottley, JJ)