Landlord Commingled Funds

January 1, 1998

LVT Number: 12060

Tenant sued landlord to recover the security deposit which wasn't placed in a separate bank account. The court ruled against tenant, and tenant appealed and won. Landlord admitted that he didn't place tenant's security deposit in a bank account for that purpose. This was a violation of General Obligations Law, and tenant could get an immediate refund of the security deposit. It didn't matter that landlord told tenant that money would be placed in landlord's mutual fund and that tenant didn't object.

Tenant sued landlord to recover the security deposit which wasn't placed in a separate bank account. The court ruled against tenant, and tenant appealed and won. Landlord admitted that he didn't place tenant's security deposit in a bank account for that purpose. This was a violation of General Obligations Law, and tenant could get an immediate refund of the security deposit. It didn't matter that landlord told tenant that money would be placed in landlord's mutual fund and that tenant didn't object. Since landlord had breached the duty not to commingle funds, landlord couldn't use the security deposit for alleged damage to the apartment.

Levy v. Taninbaum: NYLJ, p. 23, col. 6 (12/24/97) (App. T. 2 Dept.; DiPaola, PJ, Collins, Ingrassia, JJ)

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