Residential Landlords Beware 14 Day Rule of GOL 7-108[e]

Did Failure to Comply Result in Forfeiture of Damage Claim?

Michael Gordon was a tenant of Arcadian Corp. N.V. at 160 Central Park South where she owns a condominium unit. He brought a small claims action for damages Arcadian failed to return his security deposit after he moved out on March 26, 2021. There was a dispute as to the date he vacated because he did not remove his furniture until May 25.

At trial, Gordon testified that he entered into a lease agreement with Arcadian from April 9, 2018 to April 8, 2019. He provided a security deposit in the sum of $10,000.00. Pursuant to the first amendment to the lease agreement, Gordon exercised his option and extended the lease until April 8, 2021. Upon vacating the premises on March 26, 2021, Gordon was in negotiations with Arcadian’s real estate broker, Etienne Lyfaye, for the sale of his furniture to Arcadian. Lyfaye requested that he leave his furniture in the unit to allow Arcadian to take pictures of a furnished unit to help facilitate the rental to a new prospective tenant. As a result, when the lease terminated on April 8, the furniture remained in the premises while the parties continued negotiating a sales price on What’s App, a communication platform. In the meantime, the broker began marketing the rental which included pictures of Gordon’s furniture inside of the unit. However, the posting was removed at Gordon’s request.

On April 25, via What’s App, Gordon and Arcadia discussed sale of the television, lamps, tables, sofa and other furniture. The parties came to an agreed upon price for the sale of the furniture for $5,000.00. Arcadian agreed to pay $2,500.00. The broker agreed to pay the remaining balance of $2,500.00 because he wanted to market the unit with photos of the furniture. The next day, Gordon noticed that photos of the unit with his furniture were being marketed again by a different broker despite the fact that he had not yet received payment for the furniture. On May 20, he learned that Arcadian was not going to pay him the agreed upon price for the furniture. He then removed the furniture from the premises on May 25. Despite not purchasing the furniture, Gordon asserted that he has not received an itemized statement nor his security deposit. Claimant provided the lease, the first amendment to the lease agreement and emails as exhibits.

Brett Gossett, Esq. from the law firm of Romer Debbas, LLP represented Arcadian. Gossett stated that there was a dispute as to when Gordon vacated the premises because he did not remove his furniture until May 25. As a result, Gordon owed Arcadian rent arrears for April and May in the sum of $7,000.00. And he caused $2,500.00 in damages to the unit. Gossett also stated that Gordon was negotiating with the broker for the sale of furniture, and Arcadian was not aware of any such negotiations. And Arcadian sent Gordon emails dated June 5 and 11 outlining his failure to timely vacate, property damage and the security deposit. Arcadian provided emails and a June 8, 2021 invoice as exhibits.

Wide latitude is given to all litigants before the Small Claims Court and small claims’ cases are informal and simplified procedures in which the court seeks to do substantial justice between the parties according to the rules of substantive law. As it relates to deposits made by tenants of non-rent stabilized dwelling units pursuant to General Obligations Law § 7-108(e) states:

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.

Here, there was no dispute that Arcadian did not give Gordon an itemized statement and the deposit or any remaining deposit within fourteen days. Under New York law, Arcadian forfeited any right to retain any portion of the security deposit.

Gordon came forward with sufficient evidence that he vacated the premises on March 26 as evidenced in his emails. Arcadian was aware that the furniture remained in the unit according to the What’s App messages dated April 25 which is 17 days after the lease termination date of April 8. The messages were between Gordon and Lina Zymnis, the owner of Arcadian, discussing the sale of furniture and the agreed upon price. There was no need for Gordon to remove his furniture because Zymnis led him to believe she was going to purchase it. It was not until May 20, after Arcadian used the furniture for marketing purposes, that Gordon became aware that Arcadian was not going to give him the money. At which point, he removed the furniture on May 25. Furthermore, Arcadian’s June 8 electrician invoice was for the installation of Arcadian’s light fixture, and not the removal of Gordon’s fixture.

Assuming arguendo, that Gordon vacated the premises on May 25, the Court found that Arcadian had still not complied with General Obligations Law § 7-108(e). If the Court considered Arcadian’s June 5 email as an itemized statement, it only had a list of repairs, it did not itemize other expenses incurred and it did not state the basis for retaining the deposit. Arcadian’s June 11 email was past the fourteen-day requirement. For the foregoing reasons, the Court found in favor of Gordon.

Accordingly, Gordon was awarded $10,000.00 with interest from April 8, 2021, cost and disbursements.

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