In NYC, a broker who asks you to “put down a deposit to hold the apartment” while your application is reviewed is generally asking for something the rental law does not permit. Since the 2019 Housing Stability and Tenant Protection Act, a landlord, lessor, or their agent may not demand any payment, fee, or charge before or at the start of a tenancy — except a credit and background check.
You will see this called a “good faith deposit,” a “holding deposit,” or “taking it off the market.” The label does not change the rule. The money is being collected before any lease exists, for a service the renter never agreed to pay for — which is exactly what the statute prohibits. This guide explains what the law actually says, the one genuine exception, and the calm, documented way to get your money back if you have already paid.
One statute settles it: RPL § 238-a.
No landlord, lessor, sub-lessor, or grantor may demand any payment, fee, or charge for the processing, review, or acceptance of an application, or demand any other payment, fee, or charge before or at the beginning of the tenancy — except for a background check and a credit check.
That single sentence is what makes a “good faith deposit” a problem. A deposit to hold an apartment is a payment demanded before the tenancy begins, for the benefit of the landlord or broker — not one of the two narrow things the statute permits.
$20, combined
The credit and background check together are capped at $20. If you hand over a credit or background check completed within the last 30 days, even that $20 must be waived. Everything else — first month, security deposit, any broker fee you actually owe — is collected at lease signing, not before.
If it’s not allowed, why does the ask keep coming?
The honest version
- Some small landlords and independent agents simply have not kept up with the 2019 changes.
- They think a deposit signals you are serious and saves them another round of showings.
- When you cite the law politely, many back off immediately — they did not realize.
The version to watch
- Collect $500 from several hopefuls, rent to one, and quietly keep the rest.
- A request for a deposit before you have even seen the unit is a serious red flag.
- Cash with no receipt is the tell — there is nothing to trace and nothing to refund.
Co-ops and condos play by different rules.
If you are buying into a co-op or condo, an application or move-in fee is normal and legal — those are not rentals, so the $20 cap and the no-deposit rule do not apply. The same can be true for a sublet inside a co-op building, where the board’s own rules and fees layer on top of your sublease.
So before you assume a fee isn’t allowed, ask one question: is this a rental, or a co-op/condo transaction? For an ordinary apartment rental — the situation almost every renter is in — the protections of § 238-a apply and a good faith deposit is not permitted. For a co-op or condo, the building’s fees are a different animal and you should read them carefully rather than assume.
Three payments are real. A holding deposit is not one of them.
| Payment | When it’s paid | The rule |
|---|---|---|
| Credit + background check | Before the tenancy | Capped at $20 combined (RPL § 238-a). Waived if you supply a recent report. |
| Security deposit | At lease signing | Limited to one month of rent for residential rentals (GOL § 7-108). |
| First month’s rent | At lease signing | Standard. Paid when you sign, not to “reserve” the unit beforehand. |
| Good faith / holding deposit | Never (for a rental) | Demanding it before the tenancy is prohibited under RPL § 238-a. |
Note the difference from a security deposit: that is real money, paid at signing, capped at one month, and held in trust. A holding deposit is something else entirely — money taken before any lease exists, for a service you never agreed to buy.
What to do when the deposit ask lands.
- 01
Name it plainly, in writing
Reply by text or email: “My understanding is that under RPL § 238-a a deposit to hold the apartment isn’t permitted for a rental. I’m glad to apply and pay the credit/background check.” A written, polite reference to the statute resolves most of these on the spot.
- 02
Apply fast instead — that is the real edge
The genuine way to win a unit is a complete application submitted the moment you see it: pay stubs, bank statements, ID, reference letter, and a recent credit report ready to go. Speed and completeness move you up the list without paying anything that should not be paid.
- 03
If you choose to pay anyway, get a signed agreement
Some renters decide a unit is worth the risk. If so, never pay cash, use a traceable method, and get a signed receipt stating the amount, the unit, and that it is fully refundable if the application is rejected or terms change. A paper trail is what makes a refund enforceable.
- 04
Verify the agent before any money moves
Look the salesperson up in the NYS Department of State licensee search. No active license, or a request for a deposit before you have seen the unit, means stop — close the conversation.
You paid, you got rejected, now they’re quiet.
Step by step
- Send one clear written demand: cite the date, the amount, and that the application was rejected, and ask for the refund in writing.
- If you paid by credit card, you can dispute the charge with your bank.
- File a complaint with the NYS Department of State, Division of Licensing Services, against the agent or brokerage.
- For larger amounts, NYC small claims court handles disputes up to $10,000 and is built for exactly this.
Keep these
- The original listing or ad showing the advertised terms.
- Every message about the deposit — texts, emails, the receipt.
- Proof of payment with a date and the recipient’s name.
- The rejection itself, or proof the apartment was rented to someone else.
A licensed agent risks far more than a few hundred dollars by hanging on to an unearned deposit once you have documented it. Most refunds happen the moment the brokerage realizes a DOS complaint is on the table.
Don’t buy your spot in line. Be first to it.
- Set instant alerts so a matching listing reaches you the minute it posts.
- Keep an application packet ready: ID, pay stubs, bank statements, reference letter, recent credit report.
- Lead your first message with your income and timeline so the agent treats you as a real applicant.
- Reserve any money for the lease signing — never to “hold” a rental.
Common questions
The good faith deposit questions NYC renters ask before they hand over a cent.