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

SGW Properties LLC failed to return security deposits and provide an itemized list of costs, as required by new 2019 laws
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The Office of New York Attorney General Letitia James on Thursday announced that an agreement was reached with New York City landlord SGW Properties LLC and its related LLCs for failing to return nearly $300,000 in security deposits to Brooklyn residents.

In May 2021, the Office of the Attorney General 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.

All of the tenants resided in SGW’s various buildings throughout Brooklyn, including Crown Heights, Bedford-Stuyvesant, Midwood, Stuyvesant Heights, and others. 

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.

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.”

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.

“The 56th 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.”


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