The $20 cap: which rental fees are illegal in New York.

RPL § 238-a · GEN. OBLIG. LAW § 7-108

The three limits every New York renter should know.

The 2019 Housing Stability and Tenant Protection Act rewrote the rules on what a landlord can collect from a prospective tenant before handing over keys. Three provisions do most of the work, and they apply statewide, to market-rate and regulated units alike.

• Application and screening fees: $20 or actual cost, whichever is less. Real Property Law § 238-a caps what a landlord or its agent can charge for an application, background check, or credit check at the actual cost of the check, up to $20. The landlord must give you a receipt or invoice from the screening company on request, and must waive the fee entirely if you provide your own background or credit report from the last 30 days.
• No other fees to apply or move in. The same section bars a landlord from charging any other fee to process, review, or accept an application. Processing fees, move-in fees, key fees, and the like, charged to a residential tenant as a condition of renting, are not permitted.
• Security deposit: one month's rent, maximum. General Obligations Law § 7-108 provides that no deposit or advance on a residential lease may exceed one month's rent. A two-month deposit, a deposit plus last month's rent, or a pet deposit that pushes the total over one month is an overcharge.

On top of these, in New York City, the FARE Act prohibits a landlord's broker from charging the tenant a fee at all, effective June 11, 2025. Outside the city, a broker fee paid to a broker who actually worked for you remains lawful, but the state limits above still apply to the landlord.

The labels landlords use, and why they do not work.

Almost no landlord puts processing fee on an invoice anymore. The workarounds have names:

• Administrative fee or lease preparation fee. A fee to generate the lease is a fee to process the application. Not permitted.
• Move-in fee or elevator fee. Some buildings charge a refundable or non-refundable move-in fee. A refundable amount is functionally a deposit and counts toward the one-month cap. A non-refundable one charged by the landlord as a condition of the tenancy runs into § 238-a. Condo and co-op building fees charged by the building, not the landlord, are a different question and depend on the building's rules and the lease.
• Pet deposit or pet fee. A pet deposit is a deposit. If the security deposit is already one month's rent, there is no room for it. A monthly pet rent stated in the lease is rent, not a fee, and is treated differently.
• Last month's rent up front. Collecting first month, last month, and a security deposit is common in other states and an overcharge here. Rent paid in advance for a month that has not arrived is an advance under § 7-108 and counts against the one-month limit.
• Holding fee or good-faith deposit. Money paid to take a unit off the market while you apply is an advance on the deposit and must be credited or returned. It does not expand the cap.
• Tenant screening fee above $20. A $50, $75, or $100 application fee is the most common violation we see, usually justified as the screening company's rate. The statute caps the fee at actual cost or $20, whichever is lower. The screening company's rate is the landlord's cost of doing business.

What you can demand back.

The math is straightforward. For each fee, compare what you paid to what the law allows, and the difference is the overpayment.

Say you rented a $3,200 apartment in Queens. You paid a $100 application fee, a $350 move-in fee, a $6,400 security deposit described as two months, and $4,800 to the landlord's broker in July 2025. The lawful application fee is at most $20, so $80 is refundable. The move-in fee is not permitted, so $350 is refundable. The deposit is capped at $3,200, so $3,200 is an overcharge that must be returned now, not at the end of the lease. And the broker fee, paid to the landlord's agent after June 11, 2025, is prohibited outright under the FARE Act. The total demand is $8,430, plus interest, before the lease is a month old.

Overcharges on the deposit are owed back immediately, not at move-out. A landlord holding two months does not get to keep the extra month as a cushion until you leave. And at move-out, § 7-108 separately requires the landlord to return the deposit, with an itemized statement of any deductions, within 14 days of surrender, with the landlord forfeiting the right to retain any part of it if the deadline is missed. A landlord who willfully violates the deposit rules can be liable for up to twice the deposit. The security deposit demand letter covers both the overcharge and the 14-day return.

What a demand letter does here.

Fee overcharges are small individually and landlords count on that. A $80 application overcharge is not worth anyone's time alone. But the fees travel together, and a letter that lists all of them, cites § 238-a and § 7-108 by section, and demands the total with a deadline is a different proposition. It tells the landlord that the tenant knows the statute, has the receipts, and is willing to file. For a management company with dozens of units, it also raises the uncomfortable possibility that every tenant in the building was overcharged the same way.

Our letters for this claim itemize each fee against its statutory limit, attach the invoices and payment records, demand the overcharge within 14 days, and note the statutory interest and small claims filing that follow. When the broker fee is part of the package, the letter goes to the broker too. See flat-fee demand letters for how it works, and charged a broker fee after the FARE Act for the sequence when the broker fee is the main event.

When a letter is not the right tool: if the total overcharge is under a couple hundred dollars and there is no broker fee or deposit issue, a firm email citing the statute is proportionate, and you should write it yourself. Our guide to writing a demand letter covers what to include.

If the landlord ignores the letter.

Small claims court handles these. In New York City the limit is $10,000; outside the city it is lower, and the forum depends on where you live. Bring the lease, every invoice and receipt, your payment records, the demand letter, and its mailing proof. Judges in the housing and small claims parts see § 238-a and § 7-108 cases regularly and the statutes are not ambiguous. A judgment carries nine percent annual interest from the date of the overpayment.

The filing process is covered in our New York small claims guide, and the broker-fee-specific version in suing for a broker fee in NYC small claims. If you are weighing whether to send a letter first or file directly, read demand letter vs. small claims.

A note on timing and leverage.

Many tenants discover the overcharge after moving in and hesitate to raise it while they need the landlord's cooperation. Two things to weigh. First, the deposit overcharge is your money sitting in the landlord's account for the length of the lease, and the claim does not get stronger with time. Second, a tenant who asserts a statutory right in writing is protected by New York's anti-retaliation rules, which presume retaliation if a landlord moves against a tenant within a year of a good-faith complaint. The protection is not a guarantee of a renewal, but it is real, and in our experience landlords who receive a well-documented fee letter generally refund and move on rather than pick a fight over a statute they know they violated.