Portfolio exposure

Every deposit you hold is a 14-day clock waiting to start. Under GOL § 7-108(1-a)(e), missing that deadline forfeits your right to retain any portion of the deposit — not just the disputed part — and willful violations carry punitive damages up to 2× the deposit.

Deposits held

$284,900

147 units · 9 buildings

Clocks running

6

2 inside 72 hours

Forfeiture exposure

$11,400

at risk in next 14 days

Interest owed to tenants

$7,412

YTD, net of 1% admin

Statutory exposure by state of compliance

147 units · $284,900 held in trust

$19,850

is the amount you would forfeit today if every out-of-compliance deposit were litigated — 7.0% of the money you hold.

Compliant $205,400 Clock running $59,650 No bank notice $11,400 Past 14 days $8,450

Active 14-day clocks

§ 7-108(1-a)(e)

Unit

Vacated

Deposit

Days left

Interest accrued to tenants

6+ unit buildings, net of 1% admin

Gross interest earned Tenant's share (net of 1%)

Why the gap is the whole business model question. GOL § 7-103(2) lets the holder keep 1%/yr "in lieu of all other administrative and custodial expenses." On this portfolio that's ~$2,850/yr — less than the cost of doing the compliance by hand. You cannot fund this out of the float. Charge the landlord.

Build the itemized statement

§ 7-108(1-a)(b) permits deductions only for unpaid rent, damage beyond normal wear and tear, unpaid utilities payable to the landlord, and moving/storage. The landlord bears the burden of proof on reasonableness. Every line below is priced against a published useful-life schedule and must carry photo evidence from both the move-in and move-out inspection.

Unit

412 · 1140 Bedford Ave

Tenant

J. Dudley & L. Reyes

Deposit held

$3,200.00

Vacated

Jul 19, 2026

8

days to statement

Deduction lines

priced at depreciated value

Try adding the repaint and the drywall — watch what the engine says.

Evid.

Item

Claimed

Age / life

Allowable

Deposit held$3,200.00

Claimed by landlord$0.00

Disallowed by the engine$0.00

Interest owed to tenant (§ 7-103)+$41.86

Net due to tenant$3,241.86

Locks the ledger, timestamps delivery, and starts the payout.

The engine's rules

Depreciate to useful lifeA 4-year-old carpet with a 10-year life has 60% of its life left. You may charge for the 60% the tenant consumed — not a new carpet.

Repainting is wear and tearRoutine repaint after a multi-year tenancy is expressly excluded from § 7-108(1-a)(b). The engine strikes it and tells you why.

No photo, no lineYou bear the burden of proof on reasonableness. A line without paired move-in / move-out evidence is a line you will lose.

Small holes are wear and tearAnchor and nail holes from ordinary hanging are not damage beyond normal wear and tear in most NY courts.

This is the wedge. The compliance engine touches no money, requires no money transmitter license, no bank partner, and no capital. It sells to landlords as insurance against a statutorily-defined total loss. Custody is the second product, not the first.

Interest ledger

GOL § 7-103(2-a): buildings with six or more family dwelling units must hold deposits in an interest-bearing account at a banking organization within New York State, earning "the prevailing rate." Under § 7-103(2) the holder keeps 1% per year as administration expenses — "in lieu of all other administrative and custodial expenses" — and everything above that is the tenant's money.

Calculator

unit 412 · 1140 Bedford Ave · 14 units

Deposit held $3,200

Tenancy length 26 mo

Account rate (APY) 3.40%

Gross interest earnedSimple accrual on the held balance over the tenancy

—

Less holder's administration expenses§ 7-103(2) — 1%/yr, in lieu of all other administrative and custodial expenses

—

Owed to tenant at move-outTenant elects: paid annually, applied to rent, or held in trust to termination

—

What the holder actually keepsThe entire revenue available from the float, per unit, per tenancy

—

The three things this replaces

The bank notice nobody sends§ 7-103(2) requires written notice of the bank's name, address, and the deposit amount. A missing notice supports a rebuttable inference of commingling (Gihon v. 501 Second St.) — and once commingled, the landlord may not use any portion of the deposit even for otherwise legitimate purposes (LeRoy v. Sayers).

"Prevailing rate" is unobservableNo NY bank publishes a rate for lease-security accounts. A tenant cannot check whether they were paid it; a landlord cannot shop for it. Publishing the rate is a position nobody occupies.

Segregation by building, not by portfolioThe NY AG's 2022 assurance of discontinuance with SGW Properties required deposits be segregated by building. A single pooled omnibus account across a portfolio is an enforcement target.

The trap to never fall into. The moment anyone says "we can earn more than the bank pays by putting the float in T-bills or a money market fund or a stablecoin," a bank-deposit product becomes a securities product carrying principal risk on statutory trust money. That's the BlockFi fact pattern plus 12 U.S.C. § 378 and NY Banking Law § 131. And the upside is capped at 1% anyway — so the trade is strictly bad.

Return the money

Rails ranked by what they actually cost on a real refund, and by whether a non-bank platform can reach them at all. Costs shown are per-transaction on a $3,241.86 refund.

Choose a rail

tenant selects · landlord sees the fee before confirming

Selected

Venmo

Instant · $0.25 platform cost · tenant receives $3,241.86

Zelle is not available, and won't be. Network participation requires being a bank or credit union. There is no public API, no developer portal, and no BaaS provider resells it — verified absent from Unit, Column, Increase, Cross River and Treasury Prime. "Disbursements with Zelle" is a corporate treasury file-submission product for the nine member banks. Separately, the NY Attorney General sued Early Warning Services in August 2025 over more than $1B in alleged fraud losses; that suit is still active. Their appetite for a novel landlord/tenant use case is zero.

Crypto can move the payout but can never hold the deposit. § 7-103(2) requires the corpus sit in "a banking organization having a place of business within the state," and § 7-103(1) requires it stay the tenant's money with no principal risk. That forecloses stablecoin custody of a NY deposit entirely. And the payout leg is the leg that needs the license: 23 NYCRR § 200.3(b) affirmatively prohibits a BitLicensee from operating through a non-licensee agent — so the usual "ride under a licensed partner" shortcut is not just unavailable, it puts your partner in violation.

What the tenant receives

Delivered within 14 days of vacating, timestamped, with the evidence attached and the statute quoted. This is the artifact that ends the argument before it starts — and the reason a landlord pays for the software.

Itemized statement of security deposit

Unit 412, 1140 Bedford Avenue, Brooklyn NY 11216 · Tenancy May 1, 2024 – July 19, 2026 · Issued July 25, 2026 (day 6 of 14)

New York General Obligations Law § 7-108(1-a)(e): "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."

Item	Claimed	Allowable

Security deposit held in trust	$3,200.00
Interest earned, net of 1% administration expenses (§ 7-103(2))	+$41.86
Total lawfully retained	−$0.00

Returned to you

Sent via Venmo · arrives instantly

$3,241.86

Your deposit was held at Dime Community Bank, 300 Cadman Plaza W, Brooklyn NY 11201, in a trust account segregated by building, at an average rate of 3.40% APY over your tenancy. This notice satisfies GOL § 7-103(2). If you dispute any line above, reply within 30 days and the disputed amount is held pending resolution.