Fairfield illegally kept security deposits: AG
Fairfield Metro at Glen Cove is one of nearly 200 buildings owned by the apartment-rental company across Long Island and in Queens.
Credit: Newsday/David Trotman-Wilkins
Fairfield Properties illegally withheld nearly $422,600 in security deposits and has agreed to return the money and periodically report on its compliance with tenant protection laws, the state attorney general said.
Attorney General Letitia James announced Friday that her office has been investigating Fairfield and reached a legal settlement with Long Island's largest apartment owner.
From June 2019 to December 2021, the landlord kept about $422,600 in security deposit money without ensuring that tenants had a chance to avoid deductions from the sums as required by state law, according to James.
The roughly 900 instances of improperly withheld funds represents about 12% of the 8,000 relocations of households that Fairfield oversaw during the 2 1/2 years covered by the settlement, according to Allen Perlstein, an attorney who represented Fairfield in the investigation and settlement.
A state law passed in 2019 requires landlords to refund renters' full security deposits when they move out, but allows the owners to subtract "reasonable" expenses, when itemized, for unpaid rent, damage beyond "normal wear and tear" and, in some cases, utility and storage charges, according to the settlement.
Under the settlement, Fairfield will pay the state $90,000 in penalties, train staff on security deposit regulations and submit reports on how Fairfield is complying with these rules, James said.
“Fairfield withheld thousands of dollars that belonged to hardworking people, and today, we are returning that money to tenants who were shortchanged,” James said in a statement. “We will always go after landlords that violate the law and the rights of New Yorkers.”
Fairfield cooperated with the attorney general's office and has made "significant improvements" to its internal operations, which were impacted by COVID-19 during the time covered by the investigation, Perlstein said.
"Fairfield diligently processes security deposit returns. However in many cases the security deposits, net of deduction for damages and unpaid sums, were not returned within the 14-day period required by law," Perlstein said in a statement. "Fairfield greatly values its relationship with its tenants and seeks to provide the highest quality communities."
When tenants or landlords decide to end their lease, owners must send the renters a written notice of their right to attend an inspection of the unit between one and two weeks before the move-out date, the settlement said.
After evaluating the apartment's condition, landlords must send a written list with the cost of specific repairs and cleaning they plan to subtract from the security deposit, so the tenant has time to make those fixes before the lease ends, the settlement states. Owners must send a written record of the deductions within 14 days of tenants' departure — or else hand over the entire security deposit, James said.
Fairfield executives told the attorney general's office that they verbally informed residents about their right to attend apartment inspections and about any estimated deductions, the settlement said. But the company didn't always provide written notice or give renters the chance to address concerns about the conditions of units before they moved out, according to the settlement.
The landlord always included "an itemization of damages with the return of tenant security deposits," Perlstein said.
Fairfield owns 196 buildings with 13,620 rental units across Long Island and Queens, the attorney general said. Newsday previously reported that the company is the largest landlord on the Island and owns about one-fifth of units in all private apartment buildings in the region.
A regional community advocate praised the settlement.
“We applaud Attorney General James for fighting to protect renters’ rights; a large portion of tenants across the region are young professionals, minorities, and millennials who work tirelessly to afford quality housing on Long Island,” said Dan Lloyd, president of Minority Millennials, a civic engagement group. “We should not have to stress about property owners taking advantage of us and pocketing our earnings.”
Correction: A previous version of this article misstated the length of the attorney general’s investigation.
State rules on security deposits
Here's what owners of buildings with at least six units can and can't do when it comes to security deposits:
- The deposit can be no more than one month's rent; landlords can request increases to deposits as rent goes up.
- Deposit must be placed in a bank account that earns "the prevailing rate" of interest. Tenants must receive in writing the value of their deposit and the name and address of the bank.
- When tenants leave, landlords must return deposits, but can subtract a “reasonable” amount for any unpaid rent, damage “beyond normal wear and tear” and, in some cases, utility and storage costs.
- Unless tenants give less than two weeks' notice before vacating, landlords must give them written notice of their right to be present while their apartment is inspected.
- Such inspections must occur one to two weeks before the lease expires.
- During inspections, the landlord must give renters an itemized statement describing the repairs and cleaning costs that could be deducted from their deposit.
- Tenants have the right to address these issues and avoid paying penalties.
- Within two weeks of residents' departure, landlords must return the security deposit with “an itemized statement” detailing any deductions.
- Landlords lose the right to keep any portion of security deposits if this receipt and the money isn't sent to tenants within 14 days.
- Renters may request assistance by filling out a form at shorturl.at/gvADR.
Source: New York State Attorney General's Office
Sarina Trangle covers affordability and cost of living issues and other business topics. She previously worked as an editor and reporter at amNewYork.
