Brooklyn Landlord Wrongly Withheld $300K In Security Deposits, AG Says

BROOKLYN, NY — A Brooklyn landlord who wrongly withheld hundreds of thousands of dollars in security deposits has been ordered to repay tenants the money after an investigation by the attorney general, her office announced.

SGW Properties LLC — who manages buildings in Crown Heights, Bed-Stuy and other Central Brooklyn neighborhoods — agreed to hand security deposits back to 129 tenants after investigators found they had violated 2019 rental laws, according to the AG.

The landlord failed to give a required itemized list of reasons for withholding the deposits, which totaled nearly $300,000, the AG said

“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 Letitia James said. "I will always stand up to landlords who take advantage of their tenants and disregard the law for their own benefit.”

The attorney general's year-long investigation began when tenants complained the landlord was withholding their security deposits, according to the office.

The investigation found that SGW Properties had withheld security deposits without giving itemized lists required under the law in 27 buildings across Brooklyn, court records show.

Under the 2019 laws, if a 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 damages, according to the attorney general.

For their part, SGW told Patch short staffing during the coronavirus crisis made it difficult to comply with deadlines in the new laws.

"SGW Properties is fully committed to servicing its tenants and upholding the law," a spokesperson said. "SGW appreciates the Attorney General’s efforts to ensure compliance with the 2019 law and has fully cooperated with the office of the Attorney General. SGW Properties is now compliant with the legal requirements and is committed to being in compliance with the law."

The agreement with SGW orders the landlord to pay a $10,000 penalty and train all staff about the updated security deposit law, records show. They will also pay a $2,000 penalty for every significant violation of the security deposit law in the future, the AG said.

The SGW investigation is one of several the attorney general is working on concerning the new security deposit laws, according to her office.

Tenants who think their landlord is wrongly withholding their security deposit can file a consumer complaint with the Attorney General's Office.