Attorney General James Recovers Nearly $300,000 of Illegally Withheld Security Deposits for Brooklyn Tenants

SGW Properties LLC Failed to Return Security Deposits Within 14 Days
and Failed to Provide an Itemized List of Costs, as Required by New 2019 Laws

NEW YORK – New York Attorney General Letitia James today announced that she has reached an agreement with New York City landlord SGW Properties LLC and their related LLCs for failing to return approximately $296,272 in security deposits to New Yorkers following new changes to security deposit laws. Attorney General James found that SGW failed to comply with the 2019 changes to the state’s rental laws when they did not return security deposits to 129 tenants within 14 days of the tenant vacating the apartment or providing a written itemized list of their reasons for keeping the deposit. All of the tenants resided in SGW’s various buildings throughout Brooklyn, including Crown Heights, Bedford-Stuyvesant, Midwood, Stuyvesant Heights, and others. Under the terms of the agreement, SGW must return all improperly retained security deposits to approximately 129 tenants harmed by their failure to follow the law, train all staff in compliance with the updated security deposit law, and pay a $10,000 penalty.

“As housing, health, and affordability crises continue, it's more important than ever to put money back into the pockets of New Yorkers,” said Attorney General James. “Tenants deserve transparency and accountability from their landlords, and New Yorkers should trust that their security deposit will be returned to them as required by their leases and the law. I will always stand up to landlords who take advantage of their tenants and disregard the law for their own benefit.”

In June 2019, New York enacted new legal protections for tenants requiring landlords to either return the entire security deposit or provide an itemized written list of their reasons for keeping the deposit. If the landlord fails to provide the itemized list within 14 days, they no longer hold the right to keep the deposit and must return the entire amount. Tenants who sue for their security deposit and are successful are entitled to actual damages. If the landlord’s actions were intentional, the tenant is entitled to double damages.

In May 2021, the Office of the Attorney General (OAG) launched an investigation into violations of the new security deposit law, following complaints by New Yorkers who reported that their security deposits were being withheld by landlords. The investigation found that SGW failed to send itemized lists outlining their reasons for withholding security deposits, and therefore were not authorized to keep the deposit. Additionally, SGW did not properly segregate the security deposits in escrow accounts as required by law. It is estimated that SGW unlawfully withheld security deposits from 129 residents for a total of $296,272.59.

Attorney General James’ agreement with SGW ensures that all unlawfully withheld security deposits are returned to former tenants and requires the company’s staff to receive compliance training to prevent future violations. SGW must also pay $10,000 in damages to New York state and will be subject to a $2,000 penalty for every significant violation of this security deposit law in the future.

The OAG is engaged in several other investigations related to security deposits and tenant protections. The OAG will continue to monitor complaints to ensure that landlords are complying with the law. Anyone who has questions or believes that their landlord has violated the law is encouraged file a consumer complaint.

“Landlords and real estate companies take advantage of far too many New Yorkers through our already unfair and convoluted housing laws,” said Brooklyn Borough President Antonio Reynoso. “We are grateful to the Attorney General’s office for being vigilant and holding these individuals and companies accountable. May this enforcement be a deterrent to others who wish to take advantage of innocent tenants.”

“Whether it's a landlord improperly holding security deposits, or a company price gouging consumer, the attorney general is looking out for us and helping New Yorkers keep more of their hard-earned money in their pockets,” said State Senator Zellnor Myrie. “I'm grateful to the attorney general and her team for protecting Brooklynites and pursuing those who prey on them during vulnerable times.”

“The 56^th Assembly District continues to be a target for predators, scammers, and thieves to flout the law and rob tenants and good landlords of their rights,” said Assemblymember Stefani Zinerman. “Today’s announcement by Attorney General James underscores the need for residents and government to collaborate in order to enact justice upon unscrupulous landlords like SGW Properties, LLC. The return of these stolen funds is especially significant as New Yorkers are facing incredibly difficult times with inflation ravaging our economy. As a member of the state legislature, I vow to write and support laws that protect all residents and I am proud to represent people who feel empowered to report this flagrant disregard of the law to the attorney general, and confident that she will hold criminals accountable, as she has always done.”

“For too long, landlords have been able to take carte blanche when it comes to abusing tenants’ rights,” said Assemblymember Phara Souffrant Forrest. “I applaud Attorney General James for fighting to ensure accountability by getting justice for people who have had their money stolen by landlords. I look forward to the Office of the Attorney General continue to pursue these cases and ensure working class tenants have their legal rights enforced and their money protected.”

“Thanks to the vigorous efforts of Attorney General James, all Brooklynites, many of whom are my constituents, are now protected from landlords who have ignored simple and explicit security deposit laws, many of which I've sponsored and supported over the years,” said Assemblymember Helene Weinstein.

“Landlords and management companies have long acted with impunity and without accountability, serving our neighbors in bad faith, grossly neglecting tenants, and cutting corners to pad their pockets,” said New York City Council Member Crystal Hudson. “Today’s announcement by the attorney general should serve as a warning to the greedy management companies plaguing the five boroughs: your actions have consequences. Together, with the help of the Office of the Attorney General and the activists and organizers on the ground, we will continue fighting on behalf of tenants and ensure landlords and management companies are held accountable. I applaud the attorney general and her staff for delivering swift justice to our neighbors.”

“Unscrupulous landlords must be held accountable, and I thank Attorney General James and her office for their diligent work of protecting Brooklyn tenants,” said New York City Council Member Rita Joseph. “Working families in New York have struggled mightily since COVID, and it's crucial that landlords comply with all laws currently on the books, including returning security deposits as appropriate.”

“It is unethical for property managers to not return security deposits after tenants vacate their homes,” said New York City Council Member Farah N. Louis. “When tenants move their family, security deposits often serve as additional funds to support in the transition process, and without them, many families face financial burdens. Moving is costly, and failure to comply with real estate laws is unacceptable. Attorney General James’ recent actions have put tenants first by enforcing the law. As other investigations continue to come to the state’s attention, I can only hope that we see favorable outcomes for the people who depend on security deposits the most. I can only hope owners and property owners respect the law and their former tenants!”

This matter was handled by Housing Protection Unit Chief Brent Meltzer, with assistance from Housing Protection Unit Paralegal Cecily Mills, Former Policy Analysist John Petro, and Research and Analytics Chief Jonathan Werberg and Chris Nelson. The Housing Protection Unit is led by Unit Chief Brent Meltzer. The Housing Protection Unit is a part of the Division for Social Justice, which is led by Chief Deputy Attorney General Meghan Faux and overseen by First Deputy Attorney General Jennifer Levy.