Landlord Withheld "Move-Out Fee" from Security Deposit

Former tenant sued landlord in small claims court for $5,000, after landlord failed to return his full security deposit. Although tenant's lease ran through Aug. 31, 2019, tenant broke his lease and moved out mid-July. He claimed that he "surrendered" the apartment on Aug. 1 although he didn't return keys to landlord. Landlord billed tenant for August rent and automatically deducted it from tenant's bank account. Landlord returned tenant's security deposit on Sept. 13, 2019, but deducted $375. Landlord claimed that its broker tried to find a new tenant for the apartment for Aug. 1 but couldn't do so. Landlord deducted $250 for a "move-out fee" and $125 for removal by its own employees of furniture tenant left behind.

The court ruled for tenant, in part. NYC Civil Court Act Section 1804 requires courts in small claims actions to "do substantial justice between the parties." Landlord properly charged tenant for August rent since there was no enforceable early lease termination agreement. But landlord didn't follow the requirements of General Obligations Law Section 7-108 governing security deposits for non-regulated units. Landlord didn't give tenant an itemized statement within 14 days of the end of tenant's lease and therefore wasn't entitled to retain the security deposit. And, while landlord submitted to the court a move-out inspection form, there was no move-out inspection that took place with tenant. Tenant was entitled to the $375 withheld from the security deposit. No punitive damages were awarded for the $125 withheld for furniture removal. But punitive damages applied to the $250 move-out fee charged since this wasn't a permissible deduction. The court awarded tenant $500 in punitive damages.

Swenson v. Westminster Mgt., LLC: Index No. 16427/19, 2020 NY Slip Op 50381(U)(Civ. Ct. NY; 3/32/20; Kraus, J)